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 the 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 the mattress industry in terms of quality, transportation, storage and getting the distribution network right, and 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 the 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 safely.
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 notwithstanding, logistics is the toughest nut to crack for the mattress industry so far.
Over recent years, the sales channels for mattresses have shifted from brick-and-mortar stores to online sales. It is estimated that the e-commerce channel claims around 10% of world retail mattress sales.
Brands are leveraging large distribution companies to have an omnichannel 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.
Pain points
Mattresses by nature are 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, and 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 the try-before-buying direct-to-consumer (DTC) model is on the rise posing logistics challenges. The ever-growing popularity of the Amazon Prime model of hyper-fast delivery 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-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 pop up 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 bed-in-a-box and the “unboxing” phenomena to newer heights. With this, the transportation and last-mile delivery were solved but storage and inventory management still required traditional solutions discussed earlier.
Conclusion
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 the 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-commerce companies have turned to optimize packaging and shipping, there is still a huge scope for improvement in better handling distribution.