BY GARY JAMES
As more online retailers and e-commerce players pop up, brick-and-mortar stores look for ways to retain customers—and profits.
Consider these tactics for succeeding in the cyber world.
This has been a busy year on the boxed-bed front, as manufacturers and retailers alike respond to the wave of new competition from e-commerce upstarts. Dozens of new players specializing in boxed beds have emerged just in the past two years—and additional sites focused on the category continue to spring up daily.
To help traditional furniture stores and sleep shops compete with boxed-bed specialists, a number of major producers have developed their own compressed mattress lines for sale online and in stores. In many cases, the products are designed to ship directly from the manufacturer to the consumer via UPS and FedEx once an order is placed on a store website or easily taken home in a box from the store floor. Such programs are enabling brick-and-mortar stores to retain some of the business they are losing to e-commerce specialists by giving at-home buyers an option to buy from a store they already know and trust.
As part of an ongoing series, this month Sleep Savvy talks to two leaders in different aspects of the business to gain insights into this burgeoning category. Brooklyn Bedding, a fast-growing producer and retailer of boxed beds, shares its perspective on the potential this new market holds, and Fidelitone, a logistics provider, provides insights into the critical roles that delivery and service play in satisfying customer demands. The package also highlights tips on how to succeed in this new arena and key findings from Boston Retail Partners about the ongoing evolution of “unified commerce.”
For example: Brooklyn Bedding builds and sells mattresses for the online shopper
With the opening of a new, 145,000-square-foot, $15-million factory in 2015, Phoenix-based Brooklyn Bedding has positioned itself to become one of the leading online sources for mattresses in the United States, selling directly to consumers, as well as through Wayfair and Amazon.com.
The Phoenix plant nearly triples Brooklyn Bedding’s production capacity to 1,600 mattresses per day, says owner John Merwin, co-owner of the company with his brother, Rob. “The demand for our individualized mattresses has grown exponentially. The new plant nearly triples our capacity and puts us in a better position to meet our ambitious growth goals.”
Brooklyn Bedding had been producing its latex mattress line in four smaller plants in Arizona. The company is a spinoff of R&S Mattress, a 10-year-old retailer, also co-owned by the Merwins, that operates 24 stores in Arizona and Utah. Brooklyn Bedding supplies R&S with most of its mattresses and pillows.
“In 2009, we launched Brooklyn Bedding as a separate company to serve the growing market for online sales of mattresses,” Merwin says. (The company was named after John Merwin’s daughter.) “In 2010, we invested in a Teknomac roll-pack machine so that we’d have the capability to compress and roll mattresses for shipment in a box. Once we had that in place, our business took off.”
Today, the growth rate of Brooklyn Bedding’s online business outpaces that of R&S’ brick-and-mortar stores. “Our R&S stores are holding their own, but we’re not running out to sign a bunch of new leases at this point in time,” Merwin says. He adds that Brooklyn Bedding will account for 80% of the company’s total sales in 2016.
Brooklyn Bedding’s success online stems from three key factors, according to Merwin: factory-direct pricing, quality construction and product selection.
“We have learned that one mattress doesn’t fit all,” Merwin says, citing the fact that many online boxed bed specialists sell only a single model. “Different sleeping styles and different personal comfort levels demand different mattresses, even when you are working with a supportive, natural foam like latex.”
The Brooklyn Bedding line comes in three comfort levels—soft, medium and firm. Each mattress is constructed with a high-density foam core and layers of Talalay and Dunlop latex foam.
“Internet sales demand that customers have the opportunity to both test and return their purchase if it’s not exactly right for them,” Merwin says. “We want to make sure that each of our customers has chosen the mattress that is best for their singular comfort level and sleeping positions.”
Brooklyn Bedding backs up the purchase process by offering a 120-day trial period and a free return policy. Return rates currently represent less than 5% of sales.
“Our goal is to deliver a high-quality, made-in-America mattress at the lowest possible price,” he says. “Since there’s no middleman with our business model, we feel like we’re well-positioned to serve the growing number of customers who like the convenience of buying online and having their mattresses sent directly to their homes.”
Logistics: Fidelitone offers retailers direct-to-home delivery options
As traditional brick-and-mortar bedding retailers consider adding or expanding e-commerce programs, the delivery experience is one of the key issues they must consider. While drop shipping products directly to consumers’ doors via a national parcel delivery company is one viable option, particularly for boxed beds, this approach may not always be the best solution. For some retailers, partnering with a full-service logistics partner such as Fidelitone, Pilot Freight Services or XPO Logistics for e-commerce makes the most sense, particularly if they are seeking to provide consumers outside their local markets with the option of white-glove delivery.
“Retailers need to consider who their online customers are—and what level of service they expect—to determine the best approach to take,” says Daniel Sayne, director of sales for Fidelitone, based in Wauconda, Illinois. “For many consumers, it’s worth paying a little extra to have their beds brought into their homes, unpacked and set up properly, rather than doing all that work themselves.”
To serve the growing market for direct-to-home delivery of online bedding and furniture purchases, Fidelitone offers a range of services to producers and retailers, including warehousing, transportation, fulfillment, last-mile delivery and supply chain management. To support clients, the company operates a national network of 28 last-mile hubs from San Francisco and Phoenix in the West to Baltimore and Tampa, Florida in the East.
With its last-mile service, Fidelitone facilitates the white-glove delivery of beds with teams of trained specialists, who set up newly purchased products and remove old mattresses and packaging. Through its strategically located hubs, the company can reach about 69% of the U.S. population with its white-glove service, says Joe Giglio, chief marketing officer.
“Our mattress-handling protocols ensure that customers’ mattresses and box springs arrive in pristine condition—exactly as ordered,” Giglio says. That full-service approach helps minimize costly problems such as damage or unnecessary returns, he adds.
For retailers that prefer to drop ship, the company provides warehousing, order management and other support services. In this case, the actual shipment of the product still is handled by UPS or FedEx. Fidelitone’s strategically placed distribution centers ship to 98% of the U.S. population within one or two days at ground rates.
“Some retailers want to offer their consumers the ability to shop and buy products online but they would rather not handle the fulfillment. We can warehouse products for them and also manage the shipment process on their behalf,” says Sayne, adding that Fidelitone also provides real-time tracking so that retailers—and consumers—stay up to date on goods in transit.
For white-glove deliveries, Fidelitone delivers within two-hour time windows scheduled with customers the night before, and it also provides a call-ahead 30 minutes before a product’s arrival.
Survey says: Retailers respond to consumer expectations
The big challenge that brick-and-mortar retailers currently face is spelled out in a 2015 report issued by Boston-based retail consulting firm Boston Retail Partners: “Today’s retail customer is always connected and always on. She expects service anytime, anywhere and any way she wants it.” As a result, the report says, providing a “seamless” shopping experience across both the physical and digital worlds is no longer “wishful thinking—it is the expectation of today’s consumer.”
To adjust to this new reality, retailers are rolling out new mobile apps and website features, stepping up digital marketing efforts, and introducing or expanding e-commerce capabilities. The goal is to construct an environment of “unified commerce”—defined as a holistic shopping experience that integrates all aspects of a retailer’s digital and real-world operations.
According to the survey, 78% of North American retailers plan to have a unified commerce platform implemented within five years. Nearly 30% say creating a new or upgraded unified commerce platform is their top e-commerce priority for 2016.
Eighty-five percent of retailers surveyed project an increase in e-commerce website revenue in 2016, and more than two-thirds expect revenue from mobile websites to rise. Of the different categories surveyed, brick-and-mortar stores attracted the largest percentage of retailers (20%) that expected a drop in 2016 sales.
Getting off on the right foot: 5 tips for e-commerce success
- Pick the right partner. “Find someone who wants to understand your brand, your inventory needs and is willing to partner with you—not just supply you,” says Daniella Serven, chief executive officer of South Bay International in Fontana, California. Gerry Borreggine, CEO and president of Princeton, New Jersey-based Therapedic International, recommends partnering with “a turnkey manufacturer” that can provide one-stop shopping for product and order fulfillment.
- Offer the right mix. Keep it simple, vendors agree. “One size does not fit all sleepers, so you need to offer online consumers some clear choices, but at the same time you don’t want to overwhelm them,” says Gary Reach, vice president of marketing at Innocor Inc. in West Long Branch, New Jersey. “We recommend offering a focused assortment of several models designed for specific support, comfort and cooling preferences.” In addition, he says, retailers should work closely with sources to make sure that any boxed bed they sell contain foams that are suitable for compression. “Not all foam is equally compressible. Retailers want to make sure they’re sourcing quality products that are designed for this purpose.”
- Get to know SEO. Just because retailers offer a product for sale online doesn’t mean that customers will start buying, Serven says. “Think about your ad budget and get to know Google AdWords,” she recommends, adding that search engine optimization is a critical tool for driving the right traffic to websites. Another key driver? Borreggine recommends that retailers “populate the sites that millennials frequent” with their messages.
- Stimulate positive reviews. Reviews are everything in e-commerce. “Your customer service team needs to not only help you sell the product and keep it in the home, but they also need to be very aware of how the product and the store can be reviewed,” Serven says. Staff also needs to be trained on the fine art of asking for reviews, she adds. “We used to be trained on how to ask for the sale—now we need to ask for the sale and then the review.”
- Plan on returns. A well-thought-out return policy should be a cornerstone of any e-commerce program. “Develop a policy you can live with, because e-commerce buyers are going to use it,” Serven says. Borreggine adds, “Be willing—and able—to swallow a lot of water on returns. Try to keep a smile on your face in spite of it all.”
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 email@example.com.