Nest Bedding Finds Success with a ‘Brick or Click’ Approach

BY GARY JAMES
Photography by Jack Hutch

Mattress industry veteran Joe Alexander is conquering the online bedding world with an Albany, California-based retail chain, Nest Bedding, that blends physical stores with internet sales.

Joe Alexander always has marched to the beat of his own drummer. While other friends growing up in his neighborhood set up lemonade stands, Joe sold his own handmade paper airplanes.

“The Concorde, which could go twice the speed of sound, was a big deal when I was a kid,” Alexander says. “I loved taking a simple piece of paper and transforming it into a miniature version of this amazing plane.” And the fact that people might buy his creations was icing on the cake.

Today, as founder and co-owner of Albany, California-based Nest Bedding, Alexander continues to forge his own distinct path. In 2011, several years before boxed beds became the rage, he conceived the idea of creating a series of boutique bedding stores specializing in quality sleep products delivered directly to homes in a box. In 2012, he opened his first store and, in late 2016, he merged his fast-growing network of seven stores and an e-commerce operation with Brooklyn Bedding, his main sourcing partner, which operates a new $15 million, 145,000-square-foot factory in Phoenix.

The merger positions Nest Bedding for another round of rapid growth. This year, Nest Bedding plans to open four to six more stores, expanding its operation beyond its current trading regions of the San Francisco Bay area (three stores), Los Angeles (three stores) and New York (one store). Additions include a unit opened this winter in Chicago, as well as stores in Texas; Scottsdale, Arizona; and perhaps Seattle. The long-range plan is to establish a network of 50 to 70 stores in major metro markets from coast to coast.

“Teaming up with Brooklyn Bedding gives us a competitive edge because it means that Nest Bedding is now a true factory-direct retailer,” Alexander says.

And he is excited about the synergies the merger will create. “While the day-to-day operations of each company will remain largely the same, the opportunities for growth are greatly expanded,” he says. Brooklyn Bedding gains access to a fast-growing retail network, where it can sell more of its products, and Nest Bedding has greater resources and “an incredible brain trust” to take its business to the next level.

Building a ‘Nest’

Alexander started his mattress career in 1999 as a sales manager with Austin’s Home Furnishings in Northern California. After several years in that role, while surfing in Hawaii, he met with a sales manager at C.S. Wo & Sons, a top retailer he had long admired. C.S. Wo offered him a position as a retail sales associate in its Slumberworld department, where he became the retailer’s top mattress RSA, selling $1.8 million worth of product in one year.

Alexander then moved back to the mainland and worked for four years as general manager for Keetsa, where he helped the boxed-bed specialist set up a store network before venturing out on his own with Nest in 2012.

“Through all these experiences, Nest Bedding was percolating in my mind,” Alexander says. “The idea of gathering the best, locally sourced, natural materials for a new line of products, much like a bird does when it is nesting, grew and grew until I was finally ready to start my own business.”

For the first few years after its launch, Nest sourced many of its products from Johnson City, Tennessee-based BedInABox, a pioneer in the boxed-bed category. “They had good name recognition online and were eager to expand their presence at retail,” he says.

As Alexander gained more experience with the boxed-bed category, he realized there were other types of mattress constructions and price points that he wanted to add to his lineup to serve a broader range of consumers. “In 2014, Steve Holder (a consultant working with John Merwin, the co-owner of Brooklyn Bedding) came to me and said that John had a new plant and that he was looking for more people to carry his expanding line. That was the start of everything for me, because now I had a source that could execute all of the products that I was imagining,” Alexander says.

A curated mix of products

Today, Nest Bedding offers a tightly edited range of mattress constructions and price points. Except for a few models, most of the line is produced by Brooklyn Bedding, and Nest is in the process of transitioning all mattress and pillow sourcing to its partner.

The Nest line includes Love & Sleep, a promotional memory foam model with an airflow layer in two comfort levels; ActiveX, a performance mattress with ActiveX Luma cooling foam and phase-change fabrics; the Alexander Signature Series, a flagship memory foam model in three comfort levels; the Alexander Signature Hybrid, a memory foam and pocketed coil model in two comfort levels; and the Natural collection, two hybrid latex models in three comfort levels. Price points range from $599 to $3,199.

All the products can be shipped directly to consumers’ homes, taken home by the consumer in a box or, for an upcharge, delivered and set up through a white-glove service. Both online and in the store, the Alexander Signature models, which are priced around $1,199, have proven to be the strongest sellers.

In addition, Nest offers the BKB, or Big Kid’s Bed, which it bills as the first children’s mattress for the online market, and the SmartHouse Cool Sleeper mattress collection, a partnership with actress Amy Smart and her husband Carter Oosterhouse, an HGTV star and home improvement expert.

With its assortment of a dozen or so beds in stores and on its website, Nest provides consumers with “a focused range of meaningful options” in key constructions such as memory foam, pocketed coil and latex, Alexander says. “The typical mattress specialist offers as many as 60 models and it’s overwhelming to the average consumer. They don’t know where to start. They’re presented with a blizzard of brands and models that they don’t understand and have great difficulty comparing,” he says.

That situation has created a huge opportunity for Nest, Casper, Tuft & Needle and dozens of other startups that sell boxed beds online. “The rise of the internet and the ability to ship beds home in a box blew the doors off the mattress business like it did the car business,” Alexander says. Suddenly, consumers had the ability to educate themselves and examine the features of various models without ever leaving their homes—or visiting a store.

‘One size fits all’ myth

While consumers love the convenience of shopping from any place at any time, the fact that so many of the online boxed-bed specialists offer only a few models or, in some cases, only a single model, is causing new challenges. “As many consumers have discovered through trial and error, one feel or one type of mattress material doesn’t work for everyone,” Alexander says. “The 300-pound truck driver with a bad back isn’t going to experience a 10-inch foam mattress the same as a 20-something in perfect health. It’s a simple matter of weight and pressure points—everyone has different needs.”

That shortcoming is leading consumers to return boxed beds bought from e-commerce sites at a much higher rate than reported, he says. And once the return is made, most of these brands lose the customer forever because they don’t have alternate models to suggest.

“Our online return rate runs around 7% to 8%,” Alexander says. “We’d like to get that lower, but it’s pretty acceptable and in line with the returns at our stores.” By contrast, the typical boxed-bed website probably has returns in the 20% to 25% range, he contends.

Nest Bedding’s approach has been to offer the best of both worlds—the convenience of online shopping, if desired, and direct shipping, with the bonus of being able to test a variety of models in a store.

“We have foam, coils and latex,” Alexander says. “We have firm, medium and soft. We have a smart selection of beds for all type of sleepers. We can legitimately say we have something for everyone instead of trying to shoehorn everyone into one feel or one material and telling them it will cure all that ails them.”

And if someone buys a mattress that turns out not to be a good fit, Nest will swap it out within 100 days for another model.

Low-stress, friendly vibe

While Nest’s online business outpaces store sales by 2-to-1, having a store network has proved to be a critical element in the retailer’s success. The stores give online shoppers a way to check out the support and comfort of various mattresses in person—an element that continues to be an important part of the purchasing process, Alexander says. “Most people would still rather than lie on a bed first than buy it sight unseen.”

With its stores, Nest offers a boutiquelike experience. Stores sizes are small—around 1,500 square feet—and the interior environment is welcoming but simple. Plant sculptures and candles convey a spalike feeling, but the other trappings of more traditional bedding stores are kept to a minimum.

“We don’t look, smell or act like a mattress store,” Alexander says. “You’re not going to see signs and balloons and bright lights.”

For its sales team, Nest tries to hire bright, enthusiastic millennials with no bedding experience. “I’d rather hire nice people and teach them how to sell than try to hire a veteran salesperson and teach them how to be nice—that’s virtually impossible. We like to start with a fresh slate so that we don’t have to break any bad habits,” he says.

In the early days of his company, Alexander did all the staff training himself. But now, with the store network growing, he has a group of managers in place who help with hiring and training. One core tool in the training process is a how-to book about selling that Alexander wrote called “Retail Relationships.”

“We stress the importance of listening to customers,” he says. “By listening, you can identify what their needs and concerns are and then use that information to develop the best solution for their problem—which is that they need a new bed or they’re not sleeping well.”

Alexander trains his RSAs to ask a series of simple questions as part of initial conversations with customers: What are they sleeping on now? What do they like about their current mattress? What do they dislike?

The answers lead the RSA to then suggest two or three specific models to try, along with a few pillows.

“If they don’t like memory foam, we’ll try a pocketed coil or latex model,” he says. “We can quickly zero in on what they like through this ongoing testing and conversation.”

Alexander encourages his RSAs to get to know their customers “and have fun with them. We want them to be friendly, as well as knowledgeable. If they like you, they will buy from you.” And if they are not ready to buy, the RSA lets them go without applying pressure.

The same low-key approach applies to compensation. The company offers a mix of salary and commission but without the brand-driven “spiffs” that can lead RSAs to push certain models at the expense of others.

During the process of selling a mattress, Nest RSAs are trained to make the customer aware of other key products designed to enhance the sleep experience. In addition to pillows, they explain the benefits of mattress protectors and foundations.

“A lot of customers still use the old-style flexible box spring,” Alexander says. “Before they leave our stores, we make sure to tell them about how modern mattresses work much better with a stable base that is breathable, and we show them several choices that would work well with the mattress they are considering.”

Nest also does a brisk business in sheets, blankets, robes and even candles. “We offer everything you would need to create a healthy bedroom for a quality night’s sleep,” Alexander says. “We’re selling a lifestyle, since healthy sleep leads to fuller, more productive lives.”

Building a brand

In just five years of doing business, Nest has generated a wave of positive buzz among both traditional and online media. The brand has been covered in The Washington Post, Men’s Journal and Men’s Fitness, as well as The Huffington Post and Refinery 20. It also generates consistently high rankings on leading review sites such as GoodBed.com. Nest Bedding spends very little on marketing, although it does have a budget for an occasional online campaign.

The retailer also has an active presence on social media, with regular postings on Twitter, Facebook, Pinterest and Instagram. Among the topics are re-posts of comments from satisfied customers such as Golden State Warrior star Steph Curry’s wife Ayesha, who wrote about the couple’s recent purchase of an Alexander Hybrid mattress: “We are absolutely loving it! Best sleep ever!”

In addition to online reviews and ongoing media coverage, Nest Bedding also creates awareness through an innovative partnership with Airbnb, the online accommodation hub. Working with 60 “superhosts”—the most frequently visited destinations associated with the site—Nest provides bedding for guest use during stays. To encourage top hosts to participate, Nest provides free bedding and a commission on any sale that results from a guest’s stay. It also offers a discount to mattress buyers.

“There’s one popular bed-and-breakfast in New Mexico that sells 20 to 30 beds a month for us,” Alexander says. “This is a great way for our store and online shoppers to try our bedding before making their decision if they’re in an area with a superhost, and it brings new business from customers who may not otherwise be aware of us.”

Some superhosts have different Nest models in each room, offering the guests a range of sleeping surfaces to try, he adds. Plans call for putting a map on the Nest website so that visitors can easily identify which Airbnb locations have Nest bedding available for testing. Alexander says his goal is to have 1,000 Nest Bedding mattresses and pillows in Airbnb rentals around the country.

Gary James is a freelance writer who spent more than 20 years with Furniture/Today, serving as case goods editor and special projects editor, directing the editorial content of numerous supplements, sections and features. He also has served as managing editor for a variety of other business publications. He can be reached at gejames1010@gmail.com.

RETAIL RELATIONSHIPS

As more and more social and business activities move online, some boxed-bed upstarts have argued that physical stores are becoming an antiquated way to buy and sell mattresses. But for Nest Bedding founder Joe Alexander, who has his feet planted firmly in both worlds—online and brick-and-mortar—physical stores continue to offer something online selling will never match: the human experience. He explains this in his book, “Retail Relationships”:

“Human touch and interaction are as vital as food and water and yet, in this electronic age, where voicemail and online shopping dominate, we are finding less and less in-person, face-to-face human interaction. The retail experience has emerged as one of the few opportunities people have to interact with other people face to face. For many, shopping is the only time in their day they get to physically talk with other people outside of their workspace. Thus, we who work in sales—in particular, retail sales—have the opportunity to take full advantage of this situation and make a friend of our customers. And trust me, it’s much easier to make a sale when your customer sees you as a friend and not a salesperson,” he writes.

Knowing this basic information about the value of human connection can be a powerful tool on retail sales floors, if used properly. “When we look at the customer as just a sale and just a means to an end,” Alexander says, “we craft a retail experience that is based on market efficiencies and cost-per-transaction but which is devoid of the genuine compassion and care people need to feel at their best and open to possibilities. Yet when we recognize that customers are human beings with feelings and needs, and that we are here to serve their needs and wants, it begins to radically alter our approach.”