Exclusive Q&A: Fast-growing mattress brand springs to success in DTC retail
A memory foam bed-in-a-box mattress brand designed for every kind of sleeper has found success by designing superior products based on customer data.
The brand, Nectar by Resident, sells its mattresses across channels, leveraging its customer-first approach and product expertise. Launched in 2017, it was named the fastest-growing e-commerce retailer in North America in Internet Retailer’s 2019 Top 1000 Analysis Report.
Chain Store Age recently interviewed Scott McLeod, founding member and chief of staff at Resident, a digitally native omnichannel company whose portfolio includes Nectar and three other mattress brands, a rug brand and a furniture line. McLeod, a self-proclaimed growth hacker with more than a decade of experience founding, consulting for and helping to grow brands, has been instrumental in the success of the company’s premier Nectar brand. He discussed how Resident takes a data- and customer-centric approach to selling a high-price, bulky product with a complex sales cycle.
What are the unique challenges of online and direct-to-consumer mattress sales?
“You need to be able to break through the noise. A lot of online and direct-to-consumer mattress retailers have launched; you need to stand out to the customer. There is a high average order value, and unlike a lot of other direct-to-consumer niches there is a long buy cycle. Typically, it takes 14 to 60 days after a customer first visits our site or views our marketing material.
“Unlike a direct-to-consumer product like socks, a mattress is not an impulsive purchase. There is a multi-touch path to purchase that takes days or weeks, and can often involve two people and four devices over a period of 60 days. The experience is closer to buying jewelry or a car than buying socks.
“Online mattress retailing has the same challenges as direct-to-consumer. People want to touch the product. We have more than 2,000 stores and offer a forever warranty and 365-night trial. A mattress is a big product, so we try to derisk the purchase. We are also increasing our brick-and-mortar retail footprint.”
What led you to launch Nectar?
“It was a response to the wider shift of online to offline retail. With mattresses, we could take advantage of a category that had not yet been disrupted. We can guarantee product quality and efficiently roll, pack and ship the product. Mattresses are a large, high-ticket item and you don’t have to sell many to make a mark in the business. You can enter the market and be profitable.”
What solutions do you use to manage front- and back-end operations, and how are fulfillment/returns handled?
“We use a proprietary web stack for fulfillment, with a layer of the Fulfil.io e-commerce platform to support electronic data interchange (EDI). We operate our own e-commerce store, integrated with the third-party Shopify platform to support sales of earlier mattress brands.
“We are in the early days of testing buy-online-pickup-in-store and delivery of online orders from the store. For returns, customers can call and request a refund. We will pick the mattress up and donate it if it is opened.”
What has customer response been like?
“There are currently 500,000 customers on Nectar. We have competitive return rates, and our net promoter score (NPS) is on the uptick. We have seen how our product can help customers improve their quality of life through pain management or sleeping longer and better. If a customer doesn’t like a mattress, we gladly help them try another one.”
How do you make informed decisions about the customer experience?
“We are data-driven; we track money coming in and going out and measure everything in the marketing funnel. It serves as a guide for making business decisions. Resident is becoming more of an omnichannel business and less of a direct-to-consumer/online retail business.
“We’re a consumer company, we meet consumers where they are. Being data-driven, we can make better decisions on pricing and base product design on customer feedback.”