Where can I try Casper mattress

Will Casper be profitable in the future? Key facts from the stock exchange documents

by Alexander Graf · Published · Updated

Yuhuu, another hopeful e-commerce company is finally going public. In this case, the mattress startup Casper wants to try, which has also attracted attention in Germany with quite ambitious advertising measures. The prospectus is currently available online and gives us a few insights into the business model. Casper motivated many imitators and, along with a few others, shaped the trend towards “pure online” direct to consumer brands. Great products, without a middleman, smartly marketed and everyone will be happy, or something like that. Casper also made it into the current edition of the e-commerce book and was rated as follows:

Caspers has succeeded in transferring a previously barely digitized business to the online world. The Caspers marketing concept works, the recommendation rate is very good and there are imitators worldwide. The mattress industry feels shaken - chapeau! The decent margins, low returns and the solved logistics problem are very positive for the business model. Five years after it was founded, the competition with other “mattress start-ups” shows that the model is hardly sustainable in itself. Caspar has not been able to grow successfully in Germany so far, some new competitors are now insolvent again, but the dominant competitor bett1.de has a clearly superior business model. This gets by with much low marketing budgets and can bring significantly inexpensive mattresses profitably to the end customer.

To come to the fore: Even after reviewing the stock exchange documents, nothing changes in the valuation. The business model is on very shaky feet because the basis of successful e-commerce business models is not taken into account. We describe the concept in detail in the book, but here in brief the relevant factors would be the following:

  • Selection: The Casper range is very small. The customers have too few reasons to visit the shop regularly. This means that Casper has to keep acquiring customers for a lot of money via TV, Google and Facebook.
  • price: The price of Caspers mattresses is not better compared to many competitors with similarly good quality, and often even significantly worse than in the case of Bett1.de, which, however, has a more regional reach.
  • Availability: Casper does not deliver faster than the competition, although that is likely to play a subordinate role in the mattress business model.
  • Other USPs (Product, service ...): None

This is of course presented a little differently in the stock exchange prospectus, but it is up to you.

Where does Casper see his chance and his USP? Is right at the beginning of the prospectus and is generic nonsense.

People spend more time sleeping than on any other single activity throughout their lives. When we sleep better, we experience better hours awake, making us more productive, creative, happy, and healthy. We believe sleep is rapidly becoming the third pillar of wellness and is poised to undergo the same massive transformation that fitness and nutrition have as they became major consumer categories. As the wellness equation increasingly evolves to include sleep, the business of sleep is growing and evolving into what we call the Sleep Economy. We are helping to accelerate this transformation. Our mission is to awaken the potential of a well-rested world, and we want Casper to become the top-of-mind brand for best-in-class products and experiences that improve how we sleep. As a pioneer of the Sleep Economy, we bring the benefits of cutting-edge technology, data, and insights directly to consumers. We focus on building direct relationships with consumers, providing a human experience, and making shopping for sleep joyful. We meet consumers wherever they are, online and in person, providing a fun and engaging experience, while reducing the hassles associated with traditional purchases. We are building a universal, enduring brand that is already embraced by over 1.4 million happy customers. We do all of this because we understand the consumer. Shopping for sleep is a highly considered and personal decision. Today’s consumers research their purchases and move freely back and forth from online to offline. At Casper, we put the consumer first in everything we do and invest to ensure long-term valuable relationships where consumers return again and again to shop for more sleep products and services. We believe great brands win over the long term and have the ability to change the culture around them.

Casper sees itself as the leading brand of the "sleep economy" with worldwide sales of over 400 billion dollars. From their point of view, there is still a lot going on because the market is so big. It's nice to know that the market is big and is even growing, but from my point of view that has nothing to do with Casper's valuation. By the way, the checkout zone is on the move in the $ 500 billion publishing market 🙂

In general, many vanity statistics are used to explain Casper's position, i.e. numbers and facts that are irrelevant to the business, but which sound nice. For example, you are proud to have been one of 100 great inventions in 2017 named by Time magazine. Incidentally, at number 5 on this list is a coffee mug that keeps the coffee warm. OMG! The fact alone that Casper had to enter into partnerships with Amazon, Target and Costco fuels doubts about the business model

A quick look at the numbers shows that sales are increasing while marketing costs are getting proportionally better, but the observation period is too short. Marketing costs may well be optimized in preparation for the IPO, as so many other e-commerce entrepreneurs have done before their IPOs.

Conclusion: Unfortunately, Casper's story doesn't work out forward. There are no economies of scale in the business that would give hope for better times and justify the last valuation of over $ 1 billion by the Target Investment. On the other hand, bett1.de shows how to do it right. According to Northdata, this company has already made over 120 million euros in sales in 2017, with a profit of over 30 million euros. In my opinion, Casper could achieve that, but would have to forego all of the nonsense shown above and simply concentrate on a top product with lean sales. Then you can also change the mattress industry, as the sale of the industrial giant Matratzen Concord shows, which was sold to China for a ridiculous 5 million euros because an outdated business model was held there for too long.

P.S .: I would also like to have Bett1.de in the podcast, but no one there has yet responded to my various invitations. So if someone is reading along here and knows someone who knows someone ... .. you already know.

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Alexander Graf, * 1980, e-commerce entrepreneur & analyst, trained at the Otto Group, then founded over 10 companies, today Co-CEO of the leading commerce technology provider Spryker Systems. In June 2015 he did that E-commerce book published, which has led the e-commerce rankings since then. Further information here, or contact directly at: [email protected]

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