The story of Casper Mattress failing is indeed an interesting topic for business heads but also it is quite intriguing for the not-so business heads. Scroll through to know what is this Casper and how did it fail!
What Is Casper?
Casper or Casper sleep is an eCommerce company that sells sleep-related items like mattresses, which was founded in 2014. A person wanting a mattress online can easily get one from Casper. They also have a very attractive refund policy, where customers who are not so satisfied with the mattress can return the actress with a full refund within the first 100 days of the trial period.
Casper also comes with high-budget advertisements for showcasing its products. They also used the Direct-to-Consumer (DTC) model for selling their products. DTC model means the company is manufacturing their products and selling its products directly to the customers without any middleman like various wholesalers, stores, or any other websites like Walmart or Amazon.
The DTC model lessens the price of the products as the company directly sells them to the customer. Low price with great quality is the main objective of this company.
Refund policy, Direct-to-Consumer model, and high-budget advertisements are considered to be the two main reasons why Casper grew and became a Billion dollar company.
Why Did Casper Sleep Fail?
Casper was considered to be the original darling of DTC. But even after reaching the $1 Billion mark, the company got sold for just $300 Million. The deal is expected to be completed by early 2022. According to the deal, the firm needs to pay $6.90 per share.
This is an absolute nightmare for the company. If we see its past the company was never so profitable. According to reports in 2018 the company lost around $92 Million and in 2019 it lost around $70 Million. The full refund policy also contributed to the downfall of the company.
Its cost was around $80 Million, as the used mattress couldn't be sold again. The loss continued in 2020 and 2021 as well. Another important thing is that the company had spent millions on the advertisement, this somewhat has also contributed to the company's failure as a lot of money was wasted.
Is DTC A Failed Business Model?
DTC is a good business model and many companies have succeeded in using this model. The concept of direct selling to the customers is effective. But this model has led to many losses as well. Many companies have faced losses using this model. Here are a few possible reasons why DTC can be considered a failed model.
High Customer Acquisition Cost
Expensive Product
Difficulty in standing out
Top DTC Companies
1. Hello Fresh (Check their business model)
2. All Birds
3. Everlane
Retail vs Ecommerce Business Model
Retail Market:
In retail customers can physically go to the stores and interact with the shopkeepers about the product they want and can also check the quality of the product physically, and can also pay physically this decreases the chance of scams and fraud.
With the help of the retail market, customers can obtain the products they want instantly, all they have to do is to travel to the store and purchase the product they want. They do have to wait. Retail stores provide services only during the store or working hours. The duration may be 10 hours or sometimes 12 hours but not more than that. So if anyone wants to buy something they must visit the store within their working hours.
Retail stores have shopkeepers who know about the products in the store. This is also a kind of advantage for the customers if in case they don't have any knowledge about the products they can interact with the shopkeeper and get to know about the product.
E-Commerce:
Like the retail market, eCommerce also sells all types of products. But the main difference between them comes here. Unlike retail market customers, eCommerce customers cannot physically watch or feel the product they want. They have to see photos or videos of that product and purchase accordingly.
Unlike retail products which can be purchased immediately, eCommerce products take time to reach the customer's address. Customers need to wait.
Here the eCommerce market gets some advantages. Unlike the retail market which stays open for a limited time, the eCommerce market stays open 24/7.
If a customer has no idea about the product, unlike the retail market they won't be able to clear their doubts as eCommerce has no shopkeepers. They will have to rely on the product ratings and comments.
Conclusion
It can be concluded that Casper sleep is an excellent eCommerce company whose main aim was to give its customers comfort at a very effective price. It succeeded as well but at some point in time, it started falling because of many reasons which are given above. And at the same time, DTC is also a good business model but it also failed because of the reasons given above.
