Maturing digital newcomers spell greater competition
Mattresses and razors are among the product types that have been focused on by single-line specialist online-only retailers who have each sought to grab a small part of enormous target markets.
The likes of Casper with its mattresses and Dollar Shave Club with its razors have been pioneers of such strategies and have led to many copy-cat businesses launching around the world. Competition, and the demands of investors, has led to these early players branching out into broader product ranges.
While these businesses have undoubtedly been successful to date the reality is that real growth is only likely by expanding their offers beyond single product-lines. Casper started out with one mattress that was sold in six sizes. The fact is that this is only going to give it a certain amount of sales – especially when the product they have focused on is only bought infrequently.
Having established its brand name the company has been increasingly focusing its recent attention on introducing new product lines that have some link to its original mattress business. These include bedsheets, blankets and duvets as well as furniture for the bedroom such as bedside tables.
It has been a similar story with Made.com that started out selling big ticket furniture items but has recently been re-imagining its business as a designer homewares brand that sells everything for the home including even the smallest of items. The rationale has been to broaden the product offer to drive a greater frequency of purchasing.
The company has also switched to using the name Made that it feels better reflects its move to being a more multi-channel business with a growing number of physical stores, which it likes to call showrooms. A similar strategy is being pursued by Casper that raised almost $250 million and is planning to use some of it to open as many as 200 physical stores.
Such moves are not unusual for the raft of retailers that started out selling very limited ranges online but are now building-out their businesses into operations that look very much like those of traditional multi-channel retailers.
What this undoubtedly means is that the marketplace is going to remain incredibly competitive, with the established incumbents having very little room for any missteps as they battle it out with the determined newcomers.
Glynn Davis, editor of Retail Insider
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