ISSUES FACED & SOLUTIONS FOUND
The Indian market is witnessing a shift from unbranded or cotton-based mattresses towards branded mattresses. In recent years, the average growth of Indian comfort and bedding industry was 10-12 percent per annum and this is likely to grow at a CAGR of around 15 percent in the next 5 years. However, there are various challenges faced by mattress industry in terms of quality, transportation, storage and getting the distribution network right, that if solutions aren’t found in time, it could derail the growth story.
Amidst all the roadblocks the industry is able to craft innovative solutions on the go, especially in packaging and shipping. New age, internet savvy players have adopted Direct To Consumer (DTC) approach while traditional players have mostly focused on expanding and strengthening their ground level multi-tier network. Evolution and upgradation are evolving in real-time in retail touch points as well as technical innovations helping to reach the market fast and safe.
Spurred by overall economic growth, the logistics industry comprising road, rail, air and water — a $130 billion industry is expected to reach $300 billion by 2020 — this growth not withstanding, the logistics is the toughest nut to crack for the mattress industry so far.
Over recent years, the sales channels for mattresses are shifting from bricks-and-mortar stores to online sales. It is estimated that the e-commerce channel claims around 10% of word retail mattress sales.
Brands are leveraging large distribution companies to have omni-channel presence. Today, typically, customers can buy mattresses on the website and also from third-party platforms such as Amazon, Flipkart, Shopclues and Fabmart to name a few. Many companies are setting up owned stores in key markets.
Mattresses by nature are a bulky products and expensive, which is accentuated by a lack of affordable transport companies to handle them. This restricts companies from expanding their markets geographically and forces them to run their own fleet of vehicles for deliveries thus adding overheads to their operations.
Infrastructural bottlenecks also add to the tremendous strain. Loss of transportation time & transaction time at ports, land borders adversely affects the competitiveness of exporters. Another hurdle in standardizing shipping is a lack of prescribed size of mattresses as in western markets. This lack of uniformity in Indian markets puts an unnecessary burden on delivery logistics.
Innovations to the rescue
With the e-commerce trend, the culture of try-before-buying direct-to-consumer (DTC) model is on the rise posing logistics challenges. The ever-growing popularity of Amazon Prime model of hyper-fast deliver is putting pressure on companies in terms of scaling their business. Customers expect to get their product within one or two days.
Companies like Casper in the US — which is now coming to Indian shores— have shown radically new ways of packaging and shipping. Thanks to a decade’s old technique of compressing foam or mattress material to compact forms, Casper was able to pack the mattress in a small box that can be delivered by players like Amazon. Once delivered, the pack would be unboxed to reveal a highly compressed mattress which would popup into its full shape slowly.
This whole process itself though slow and tedious, turned out to be “an experience” customers loved to have. It was sheer serendipity. E-commerce led mattress players since then have taken to bed-in-a-box and the “unboxing” phenomena to newer heights. With this, the transportation and last mile delivery was solved but storage, inventory management still required traditional solutions discussed earlier.
Finished product distribution is a vexing issue in any industry. It is more so in the mattress industry given the size of the product and the need for careful handling due to expensive, fragile material involved. While, traditional players have evolved a good strategy over time, the new age Amazon-like, hyper-fast age requires new solutions. While, e-com companies have turned to optimize packaging and shipping, there is still a huge scope for improvement in better handling distribution.