Online sales boom for mattresses squished into boxes

Some internet-based startups are waking up the sleepy world of bedding -- and putting yet another sector of store-based retailing, one that thought it was immune from online sellers, at risk.

They're doing it by innovating in a way few might have imagined: They discovered that mattresses could be sold online and shipped directly to consumers by squishing them into boxes not much bigger than a three-drawer file cabinet.

Anyone who has moved a traditional full mattress up a flight or two of stairs knows they are unwieldy and bulky. But aided by machines that can compress a king-sized mattress pancake-flat and roll it up like a sleeping bag, the bed-in-a-box business has emerged to take on traditional mattress stores.

“The online mattress business really went from nothing to a $1.5 billion business in the blink of an eye,” said Kathy Thornton-Bias, president of Milwaukee-based Verlo Mattress. “This whole industry has been disrupted by the idea that maybe you don’t have to try the mattress before you buy it.”

Verlo doesn’t want to get left behind by the trend. The chain of 37 sleep shops just launched its own mattress-in-a-box line, dubbed Verlo-to-Go.

Other traditional mattress retailers have been doing the same – a prudent step, in the view of Mark Jannke, an industry veteran based at a Watertown, Wis., factory with a growing business supplying the boxed-mattress niche.

“They need to make sure they stay with the times, because they’re going to lose business if they don’t adapt to the way people are buying these days,” Jannke said.

The online mattress business has been pioneered by firms such as Phoenix-based Tuft & Needle. Started in late 2012 by two Silicon Valley refugees with $6,000 of their own money and no outside investors, Tuft & Needle says it took in more than $100 million in revenue last year and now has 150 employees.

Another startup, Casper, claims an even more rapid rise. The New York company, which launched in 2014 and whose investors include actor Leonardo DiCaprio, reportedly doubled its sales in 2016 to $200 million.

These web-based firms typically allow money-back returns of mattresses -- returned mattresses end up being donated to charity or dumped -- up to 100 days after purchase.

“This is a real challenge for brick-and-mortar retailers,” said David Perry, executive editor of trade journal Furniture Today. “This is a full-blown phenomenon right now. There is a huge amount of talk about it in the industry.” The online share of ​U.S. retail mattress sales was 6% in 2014. Now, Perry says some in the industry think it has gone to 10%. "This is considered a really sexy, cutting edge business.”

It’s also a source of opportunity for some.

Symbol Mattress, a Virginia company with 80 employees, installed a machine in its Wisconsin factory last year that compresses foam mattresses and rolls them up so they fit in a cardboard box 18 inches square by 44 inches high.

After just 15 months, the plant is producing mattresses-in-a-box for more than 25 online retailers. And Symbol has limited that contracting work so it can ensure capacity for its own production, Jannke said.

“Ten years ago, I never would have thought it was possible,” he said. “I never thought people would spend $600 to $1,000 on a mattress that they never saw or touched.”

Symbol didn’t have to go far for its mattress squisher. The machine came from C3, an engineering and manufacturing firm in Appleton, Wis.

Established in 1994, C3 built its first compression equipment about five years ago, but it’s only since 2015 that the market has taken off, said Mark DesJardin, who oversees business development and marketing for the company. Since then, C3 has sold more than 40 of the big machines, which can exert anywhere from 8 to 40 tons of pressure and cost upwards of $300,000.

With the machines, a fully puffed mattress is fed through a curtain of plastic film until it lies between two massive steel plates. Four hydraulically driven pistons flatten the bedding by squeezing out the air.

The machine heat-seals the plastic around the mattress, which then is folded in half and rolled into a cylinder, ready to be boxed. When the customer opens the bag, air starts seeping into the mattress and it gradually rises like a loaf of bread.

Jerry Epperson, a founder of Richmond, Va.-based investment banker Mann, Armistead & Epperson, once thought the mattress-in-a-box business was a fad. While still harboring doubts about the online retailers – there are now about 100, he said – he has concluded that they fill a real need, primarily from young adults.

“I used to tell people they were the pet rock of the mattress industry,” Epperson said. “But (now) I don’t think so.”