2024-11-05 19:10:30 :
A tech professional, Vinesh sat multiple times on the store’s king-size “orthopedic” memory foam mattress, which also sits atop a bed frame, coffee table, dining table and three-seat sofa.
He’s a repeat customer — he previously purchased a coffee table and two sleep pillows from Wakefit, a mattress startup that now also sells furniture. Vinesh wants to replace his five-year-old foam mattress made by Kurlon.
“I have tried several mattress brands before. I have been using Kurlon for the longest time. Recently, I bought one from Sleepyhead (another mattress company) for my 70-year-old mother. The new brand is good,” says Vinesh . He added that Wakefit’s products are good value for money. “The coffee table is beautiful and the pillows retain their original shape.” ” He added that he believed the mattress he tried would not disappoint.
Young India’s transformation into new mattress companies over the past few years, fueled by a steady stream of venture capital funding, has been nothing short of spectacular. Wakefit, in particular, has been leading the way—the startup’s revenue has grown 12x over the past five years, ending with nearly $1,000 crore in 2023-24. This rapid rise has troubled traditional companies.
Take Cullen, for example. The company was established in 1962 as Karnataka Coir Products Pvt. and has a history of over 60 years. Ltd. is located in Arsikere town, Karnataka. The company was acquired by Sheela Foam Ltd in July 2023. In 2023-24, the company’s consolidated revenue will be $819 crore, lower than Wakefit, a company founded less than 10 years ago.
Wakefit is also fighting an uphill battle against Sheela Foam, a larger and more diversified company with a combined size three times the size of Wakefit. More on this later.
How exactly does Wakefit do this?
ideas from wedding
Wakefit was founded in 2016 when co-founder Ankit Garg was trying to build a home while getting married.
Garg is a chemical engineer with a background in foaming, having worked for the German multinational Bayer MaterialScience, a major supplier of raw materials for foam manufacturing. While shopping for a mattress, he noticed a huge gap between the cost price of foam and its retail price.
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Together with Chaitanya Ramalingegowda, the second founder of Wakefit, he started studying the market. The pair noticed that Casper, a U.S. direct-to-consumer (D2C) mattress company founded in 2014, had begun to perform well. They believe the online channel, known primarily for small items such as electronics, can also sell sleep products in India. But they seriously underestimated the market.
“We thought this would be a $Achieve 20-30 core businesses within five or six years. said Ramalingegowda, sitting at T’ART Cafe on Brigade Road in Bengaluru.
Likewise, the industry doesn’t think they can make it big. At one point, the founders approached two traditional mattress manufacturers for investment. “They didn’t give us a meeting because they thought online would never grow,” said Ramalingegowda, a former computer science engineer and management consultant who did not name the companies.
Fast forward to 2024. The company is backed by some of the country’s top investors, including Peak XV Partners, Investcorp and SIG Venture Capital.
Don’t overpay
The secret to Wakefit’s disruption lies in their chosen channel – D2C. This sales channel eliminates the middleman, thereby lowering prices for consumers.
This is what a legacy distribution looks like. In Bangalore, there are at least two levels of middlemen between brands and customers – one is the main distributor and the other is the individual retailer. In smaller cities, the situation becomes more complicated, with as many as four levels of middlemen. “For traditional products, customers pay 20% to 45% more, depending on the model, because everyone adds 2%-8% to their own profits,” Ramalingegowda said.
An industry executive who spoke on condition of anonymity said aggressive pricing by Wakefit and other D2C mattress companies has driven down the industry’s average selling price. “Older brands used to have mattresses priced at $20,000 and rising to $50,000. Now you can even get a quality mattress easily $10,000,” the executive said.
Older brands used to have mattresses priced at $20,000. Now you can even get a quality mattress easily $10,000. — an executive
Orthopedic memory foam mattress tested by Vinesh at Ejipura store currently on sale $13,000 on the Wakefit website, on sale.
“When someone switches from an unbranded mattress to a branded mattress or tries a mattress on e-commerce for the first time, they tend to choose the lower price. That’s what Wakefit did initially.” An investor in the company asked not to be named expressed.
The mattress also offers a “100-day trial” offer. According to some company employees Mint In conversation, this is a game changer. If people are uncomfortable sleeping on a mattress, they can return the mattress and get their money back. This opens up a larger market.
for spine
The investors cited above also pointed out the startup’s uniqueness. What Wakefit did was not innovate, but they redesigned the product. “They can $4,000-5,000 and $7,000. Getting foam with different chemicals and so on is where the redesign comes in,” the investor said.
“Our mattresses have had different layer combinations at different points in time, and the innovation happened at a deeper material science level,” Ramalingegowda said. “We explored various materials based on consumer preferences and feedback and learned about different formulations, Airflow, and density create optimal comfort for Indian consumers.”
The current version of the orthopedic mattress is the 22nd version. When the company was founded, what set it apart was the mattress’s top layer, which used a proprietary foam with large holes for better ventilation. The middle layer has softer memory foam, which takes on the shape of the body, while the third layer is made up of hard foam. The combination of layers better supports the spine.
mattress wars
How does all this disruption affect competitors?
This is a glimpse. Sleepwell generates revenue of $According to its annual report, there will be 874 in 2022-23. In the same year, Wakefit’s mattress revenue was approx. $According to statistics, 618 crores Mint Calculations based on Toffler data and interactions with companies. The revenue difference with its larger competitor is only $256 crores.
Sleepwell (Sheela Foam) subsequently grew with the acquisition of Kurlon. The combined entity’s total revenue is $1,053 crore in 2023-24. By comparison, Wakefit’s mattress sales were $6.9 billion rupees.
Despite the widening income gap, the threat is clear. The Indian mattress market is increasingly competitive, with both established players and start-ups vying for market share, Sheela Foam said in its annual report. “Such competition could spark price wars and put pressure on profit margins,” it warned.
Other D2C players believe traditional players are saddled with complex product portfolios. “Market entry is so dependent on retailers and distributors that there is no investment in consumer brands, consumer education, the importance of sleep, etc. Traditional players cannot grow,” said co-founder Priyanka Salot. The Sleep Company is a D2C mattress The second largest player in the field, the company’s operating revenue is $127 crore in 2022-23 and claimed to have been completed $335 crore last year.
An unnamed Sleepwell executive said the company is doubling down on offline sales while trying to expand its digital business.
“We’ve been launching new products very quickly over the past few months. We’re launching the fourth and fifth series of about 15 plus models, which is a one-time big thing. We’re upgrading our entire product range because we think there’s It’s necessary to stay ahead of the competition,” the executive added.
Sleepwell No reply Mint.
Promise and danger
After disrupting the market, what challenges does Wakefit face? It is about the next phase of growth, full of both promise and danger.
In 2022, the company went offline and opened stores like Ejipura to compete head-on with established players. But simply selling mattresses isn’t enough to keep a store afloat. Wakefit’s foray into the furniture market represents a bigger opportunity – the Indian furniture market is currently worth $24 billion, according to Mordor Intelligence, while the total mattress market is just $2 billion. Furniture has a higher average selling price (ASP) than mattresses or cushions.
“Offline, you can’t sustain sales per square foot with mattresses alone, and if you only stay online, you can only become a $1,000-crore brand,” said the above-mentioned investor.
But offline stores also face a series of challenges – rent being the biggest one. “If you want an exclusive showroom now, it’s too expensive to rent space. They’re going to have to rely on investor funding to run the business in the short term. Unless they find a way to generate profits from each store, they will It’s unsustainable,” said the Sleepwell executive quoted above.
There are other bottlenecks in moving into furniture, such as logistics and production. “Mattress production is easy because it is automated. With furniture, you need a minimum order quantity depending on the design. Expanding the production facility is a task, as is having a larger product catalog,” the investor said.
Wakefit manufactures furniture at its factory in Hosur.
Mattress production is easy because it is automated. For furniture, the company requires a minimum order quantity depending on the design.
Analysts agree. Ashish Dhir, senior director of consumer and retail at research and advisory firm 1Lattice, said expanding the home décor category requires addressing and managing supply chain complexities in addition to ensuring consistent product quality across categories. “Wakefit has increased its offline retail business from 10-15 stores to over 92 stores across 33 cities, which requires strong logistics and quality control systems. Additionally, maintaining customer trust and ensuring seamlessness between categories Transition is critical,” he said.
Wakefit’s woes are clear when you scan customer reviews on e-commerce sites. A bed with storage made from engineered wood has nearly 19,000 ratings on Amazon. The vast majority (nearly 90%) rated it 4 stars and above. Buyers who rated the product 1 star complained about “low-grade granular material,” “poor installation quality in cities without Wakefit stores,” and delayed delivery.
Ramalingegowda is aware of these challenges. He hopes to steer the company differently in its next phase. “The way we build this $A Rs 1,000-crore company is not how we build one $3,000-crore company,” he stressed. He added that the furniture and mattress categories behave like two different companies and centralized decision-making structures may slow things down.
He further said: “We have to innovate by hiring more entrepreneurial talent. Just like we disrupted an old industry, others can disrupt us.”
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