Tuft & Needle: Sleep in Heavenly Peace

Mattresses that are simple, affordable, and convenient — table stakes. What else?

The $7 BN mattress industry has traditionally been characterized by badly lit showrooms, a seemingly endless array of products with fancy names, pushy salesmen, opaque pricing layered with markups and discounts, and a cumbersome return process — all culminating in a buying process that leaves you unsure whether you’ve chosen the right mattress but certain that you’ve somehow massively overpaid. Start-ups like Casper, Leesa, Saatva, and Yogabed have set out to do to this industry what Warby Parker has done to eyewear, the so-called “bed in the box” model that makes simple mattresses, sells them online, cuts out the middleman (and accordingly, the price), and delivers to your door.

Screen Shot 2015-12-09 at 20.56.53

Tuft and Needle is one such business. With the tagline “sleep on an honestly crafted mattress at a fair price,” T&N offers a single product (the “T&N mattress”) for $350-$750 depending on size, on its own website and Amazon.com, with free delivery, 100-night trial, and 10-year warranty. Simple, affordable, and convenient — table stakes. Several key choices, however, set T&N apart from competitors and create a reinforcing link between its operating model and business model:

Screen Shot 2015-12-09 at 20.54.24

Focus on customer experience

T&N began in late 2012 after co-founder JT Marino had a bad experience buying a mattress; naturally, ensuring seamless customer experience is a core value across the organization. All employees, regardless of role, go through a two-week customer service training program upon joining the company, so that they are equipped to interact with customers and address their questions. T&N solicits and responds to both quantitative and qualitative customer feedback, using analytics to customize the website according to customer preferences, and reaching out after every purchase to ask for detailed feedback and encourage returns from dissatisfied customers. These efforts haven’t gone unnoticed — T&N recorded revenues of $1M in 2013, and $9M in 2014, thanks to word-of-mouth referrals from happy customers.

Screen Shot 2015-12-09 at 21.04.05

Iterative product innovation

T&N approach the mattress “like it was software”, iterating continuously in response to customer feedback. The current 10-inch T&N mattress has evolved from the initial 5-inch Japanese shikibuton model, reflecting over 30 changes made in the past year alone. The product innovation process also leverages T&N’s strong relationships with suppliers, who share their expertise in foam materials and provide material for experimentation. The result: a top-rated mattress within Amazon.com’s Furniture category, with 87% five-star reviews, Net Promoter Score north of 65, and return rate under 1%.

Screen Shot 2015-12-09 at 21.00.44

Single price strategy

The T&N mattress costs the same every day of the year, with no holiday or referral discounts. While a single price strategy is not conducive to maximizing revenue, T&N uses it to reinforce its  customer experience and minimize hidden costs. The single price builds trust with the customer and ultimately increases customer satisfaction — it allows customers “peace of mind” that they paid a fair price for a quality product, without having to “jump through hoops to get the best deal,” or wonder after purchase if they did in fact get a good deal. The single price eliminates costs associated with meeting surges in demand, such as hiring/training costs for temporary workers and increased production overhead, and reduces cost associated with returns, by filtering out customers who are not excited enough about the brand to buy full-price and thus more likely to return the product.

Screen Shot 2015-12-09 at 21.04.45

Tuft and Needle shows that a values-driven business is able to drive close alignment between its business and operating models. Will it be able to maintain that alignment going forward as it scales and builds out a brick-and-mortar presence?



Operations Driving Deep Customer Value in Furniture Retail


LinkedIn: Capitalizing on All Value Streams

Student comments on Tuft & Needle: Sleep in Heavenly Peace

  1. Great post and interesting question you posed about the Company’s future with a brick-and-mortar presence. I wonder if the current online only model protects it from direct comparison to Sleep Train, Sleepy’s, and other traditional retailers. So many customers have had a poor experience that they may turn to Tuft & Needle out of spite. Their expectations for service and quality may therefore be lower. Regardless, it’s an awesome entry strategy to disrupt a scorned industry and from which to continue investing in factors customers care about. I will definitely consider them when I make my next move.

  2. I used to own one of the original Shikibuton models and remember being surprised by how thin it was. However, it ended up being really comfortable and the best part was how it arrived – rolled up in a small 3 by 1 ft box. As you described, their customer service is truly excellent – the wrapper around my mattress started fraying after a few months and they shipped a new wrapper to me within 2 days when I emailed them about it. It’s interesting how the industry has become more competitive recently with Casper and other startups – wonder who will win and how much market share the new companies will take from legacy ones.

  3. I’ve heard great reviews of Casper and Tuft & Needle as two of the big names in this new trend in New York. However, I’m really curious as to how a T&N differentiates itself from the competition and how it might communicate that to consumers?

  4. Great post! I find it interesting that T&N uses Amazon as an additional distribution channel. Did you ever come across why they chose this (outside of Amazon’s audience reach?) It would be interesting to see the split (or estimate) of orders they’ve received on their O&O site vs. Amazon to get a sense of how strong their brand awareness / customer loyalty is.

  5. Great post, “Sleepy”. This past August, I was in the market for a new mattress and spent a significant time learning about each of these companies and their product offerings. This was my first exposure to this new online mattress start-up concept. During my search process, I focused on three things: trialability, price, and delivery time.

    Given that people spend ~30% of their days sleeping, mattress quality and comfort are critical. Therefore, I think the #1 concern for consumers is trialability. To this point, do you think setting up small showrooms in urban areas would be helpful? I understand there is a comprehensive return policy, but is that enough for consumers to trust online mattress companies?

    I think the single price strategy is great. Although some companies offer discounts, I think the consistency really does give consumers “piece of mind”. Furthermore, consumers are generally looking for a mattress in short order, so discounts will unlikely encourage faster decision making anyway.

    I also noticed that most of the companies sold their mattresses for roughly the same price. Do you think either of them have any manufacturing advantage or is it scale that will drive margins?

    Finally, delivery time is also very important. I ultimately went with Brooklyn Bedding because they were able to guarantee delivery within 2-4 business days. Retail stores are able to deliver even faster which is why I don’t think they will ever be completely disintermediated. However, what do you think will happen to the Sleepy’s of the world? How will they compete of even stay in business?

Leave a comment