The company that brought innovation to selling mattresses is no more.
New York based 1800mattress.com pioneered direct marketing for bedding, first by telephone and later via the Internet, with a focus on easy ordering, fast delivery and customer satisfaction. But channel expansion into retail stores may have been its downfall.
The business was sold in bankruptcy auction in late June to rival Sleepy’s, Inc., who will fold the direct marketing part of the company into its own operations. Sleepy’s is a privately-owned company with nearly 700 locations in eleven states.
Company founder Napoleon Barragan built his business, first called Dial-A-Mattress, with a direct response local telephone marketing campaign via newspaper advertising. He later expanded to radio and tv advertising with messages that encouraged consumers to “Dial 1-800-MATTRESS and leave off the last S for savings.” Advertising on Howard Stern’s radio show was also an important part of the marketing mix.
Barragan developed an effective business model that featured two-hour delivery in the New York metropolitan area (no more waiting at home all day long) and a customer satisfaction guarantee. Telephone sales was later expanded to include Internet selling – same concept, good extension. The company’s name evolved with the times as well: from Dial-A-Mattress to 1-800-Mattress and then 1800mattress.com in 2007.
It was the decision to expand into retail stores that proved to be momentous, and ill fated. According to The Wall Street Journal, beginning in 2001, the company opened 48 stores, mostly in the New York metro area, with a few in Washington, D.C., San Francisco and Chicago. Bad location was a major reason for poor performance, and the post 9-11 economic environment hurt too. But it seems that a classic mistake was made. The company strayed from its core idea and positioning, which was a unique consumer proposition for directly and conveniently buying mattresses by phone and Internet, to move into retail stores. Unlike the company’s partnership with retailers in other region’s to extend its reach and basic proposition, expanding into retail stores moved the company into a different business and different business model.
It’s far easier to build on a brick-and-mortar base and add the internet as a channel (e.g., Barnes & Noble) than to take a direct marketing model and integrate backward to include brick-and-mortar (e.g., Gateway). Simply put, “they got away from the business they did best,” summarized Furniture World magazine reporter Larry Thomas, a long-time follower of Barragan and his company, in a May 2009 Associated Press article. Mr. Barragan, quoted in The Wall Street Journal, acknowleded that he should have “concentrated on his original direct-marketing formula.”
Going forward, new owner Sleepy’s plans to leverage that direct marketing approach. “1800mattress.com is a valuable brand poised for future growth,” said COO Adam Blank in a statement.
Channel selection is a strategic decision and should be in sync with who the company is and what it does best. The core business idea, consumer benefits and competitive points of advantage should drive the decision on what channels in which to compete. Stick to your strengths, and resist the urge to be like everyone else. Do what you do best!
Harvey Chimoff is a hands-on marketing leader and business-wide collaborator who builds marketing capabilities in B2B/B2C organizations that drive customer success.