Q&A: Steve Adams, chief executive of Mattress Online
In this latest chief executive interview, we speak to Steve Adams of Mattress Online. In June, the retailer announced that it had achieved record business growth in the previous 12 months with trading driven by a surge in sales during the Covid-19 pandemic.
What were you doing before you founded the business?
Prior to setting up Mattress Online, I had a career in building ecommerce websites for clients that culminated in owning my own agency, right around the time of the dot-com bust and tech crash of 2000. This led to a challenging time where I managed to navigate the sale of the agency, and it was taken on by a traditional branding agency.
While this was an amazing outcome, and pivot for the business and the team in a difficult time, it didn’t make me happy. I wanted to work for myself again, so for three years I kept my eyes and mind open for another opportunity that would enable me to be independent again and offer me the entrepreneurial challenges that make me tick.
Why did you decide to set up as a mattress retailer?
To begin with it wasn’t an obvious choice, I met my future business partner by chance and we got chatting about the opportunity, the bed and mattress market
online was embryonic in 2003. I asked myself the question, would anyone actually buy a mattress online without the option to try it first? I threw myself into market research to understand the sector more, a clear winner in the sector was mail order, in particular Argos, by volume they were (and still are) massive. I thought to myself, you can’t try a mattress in Argos, and their little blue pen ordering system was functionally not that far removed from an ecommerce
checkout.
Tell us more about how you developed the business?
It was steady organic, we reinvested our profits back into the pot to grow the business. It also helped that our Adwords spend was only £5 a day back then!
We started by importing vacuum packed (rolled) mattresses from Italy, stored in a third party fulfilment centre with a drop ship model. As a result, Mattress Online pioneered the next day delivery model in our sector.
This worked really well for the first couple of years but was not a long term viable option for growth, we needed to bring the stock in-house and expand our product profile to UK sourced well-known brands that are delivered full size. So in 2006 we relocated to Rotherham, taking on a bricks-and-mortar store, and a
warehouse. Simultaneously, we extended our product range to include the two biggest bed brands in the UK, Silentnight and Sealy.
From there we kept our heads down, slowly building the business, making a profit every year and reinvesting for growth. A pivotal moment came in 2019 when I raised our first ever external finance to buy out my long term business partner. This gave me the opportunity to really put my stamp on Mattress Online, grow the team with high-quality hires, and change the culture to more that of a technology company – albeit one that sells mattresses.
Can you tell us about your marketing strategies and activities to keep customers engaged?
This is the single biggest challenge for our business. With a long product life cycle the opportunity to engage with our customers is limited, repeat purchases are minimal, and we need to make a profit on each and every sale. We spend a lot of time and resource understanding our demographics and tailoring
our messaging to convey our service offering as much as our product offering.
We are incredibly data driven which helps us calculate effectively our acquisition costs and ROI across all channels – from paid to social. We experiment a lot, learn from mistakes and try to think outside of the box. An example being our first stab at ATL marketing with two TV campaigns in the last year, a strategy we will repeat in 2022.
How has the Covid-19 pandemic affected your business? Tell us more about other challenges.
Our business model was relatively Covid friendly on day one, we are the largest stockholder of mattresses in the UK, at the announcement of the first lockdown we had 15,000 mattresses in stock. This provided us with the opportunity to gain market share while many of our competitors were closed for business.
Being a relatively small and agile team we updated our delivery policies overnight and altered our customer offer to only sell products we knew we could supply. With 18 years experience in the sector, we were able to work closely with our suppliers to forecast and replenish stock, supporting them with prepayments to facilitate the supply chain.
How do you see the business developing in the future?
Commanding less than 1.5% of the mattress retail market we still have lots of potential growth just in our existing category. However, we have plans to extend into more premium product lines and will be introducing bed frames, sofa beds and bedroom furniture in the next 12 to 18 months. We even have one of the UK’s first smart beds launching on our website in the first quarter of 2022.
Additionally, we are extending our store footprint with a strategy to acquire seven independent bed stores over the next three years. These will be modelled to offer a true omnichannel shopping experience within existing, high quality yet traditional bricks-and-mortar.
What makes the business stand out from other retailers in the same space?
We have the perfect mix of real people with years of industry experience but with a technology and data focus. This means we offer cutting edge technology without being run by an algorithm.
We are very customer led. Our focus is to offer first class service with a great product offering, consistently listening to our customers. Our experience and working relationships have helped to grow Mattress Online to be the Amazon Prime of the bed and mattress category, offering next day delivery, seven days a week.
How have you invested in innovation/technology and how has it helped the business?
We have created our own platform for both the ecommerce front end and the operational systems that sit in the background. We have created a streamlined business, lean through our automation, and have iterated over the years on our bespoke technology.
Our digital and technical development team have created an ecommerce platform that is market leading, helping us compete in terms of search position and conversation rate with competitors ten times our size. We will be reporting a £37.5 million revenue for our last financial year (31 May), achieving this with a relatively modest team of 61 people.
Mattress Online has a whole raft of conversion rate optimisation opportunities to deliver on in 2022 and beyond, using our technology as the backbone for these improvements. Having our own bespoke platform and inhouse development team gave us control throughout Covid to flex our offering. Going forward our biggest challenge will be prioritising our next improvement for the biggest ROI.
