Why we invested in SleepyCat

Kamini Shivalkar
Oct 4 · 3 min read
Image source: Sleepycat logo

SleepyCat is our first investment in D2C space. In India, there has been limited innovation in the mattress space in the last couple of decades. Over 65% of the market comprises of fragmented unorganised players and 35% comprises of organised branded players. Within the organised space as well, the distribution channel has been offline and traditional. Only 2–3% of total mattresses in India are sold online. We believe this will change faster than most people anticipate and will touch 10% within the next five years.

Buying a mattress from a retail store is not a great experience. Customers often visit multiple stores, get muddled with choices and prices and are also prone to mis-selling by the salesman. Logistics is another nightmare given the bulky nature of mattress. Globally, this industry is changing with online D2C brands challenging traditional offline incumbents. Casper in the US has reinvented the mattress buying experience by being the first company to sell mattress in a box online. SleepyCat on similar lines is a homegrown ‘mattress in a box’ brand targeting the burgeoning middle-class tech-savvy customers. It’s an aspirational brand with sleek, minimalist design. Being D2C keeps the pricing within reach and gives you higher customer engagement. They have made the customer buying process easy.

SleepyCat is a sleep solutions company and will cater to adjacent categories such as duvets, quilts, bedsheets, pillows, blankets, bed bases and bed frames. SleepyCat’s manufacturing facility is based in India ensuring better quality control, quicker trial for new products and faster deliveries. SleepyCat has shown phenomenal growth with limited online marketing budget and zero physical presence since its inception. It is already EBITDA positive and sales are expected to double this festive season and with the launch of new products.

SleepyCat is the brainchild of Kabir Siddiq. He was inspired by Casper and looked for ways to bring “Bed in a box” tech to India.

‘Kabir personally spoke to the first 5000 customers and incorporated all their feedback in building a better product’

He is a product-focused founder with attention to the tiniest of details. This quality consciousness has led to a very low return rate and 4.7 rating on Amazon. We already see early signs of product market fit since existing customers are referring to new customers and everyone loves the brand.

Indian mattress market is expected to be ~Rs.14K cr by FY21. GST implementation has given an impetus to the increasing market share of the organized players. Organised market share is expected to be 40% of the total market by FY21. Another way to look at this market is, that there are ~70 mn upper middle class and rich households in India. Assuming 2 mattresses per household, this segment would buy 140 mn mattresses over the next 10 years (average life of a mattress is ~10 years). This means ~14 mn mattresses will be sold every year. Even at a selling price of ~Rs. 10K per mattress, this results in Rs. 14k cr market opportunity for organised branded segment itself. Rising urbanisation and migration, distributed workforce, smart city projects, rise in co-living, rising disposable income, aspiring luxury lifestyle are key growth drivers. Additionally, increasing awareness about sleeping related disorders has made millennials realise the importance of a quality mattress in one’s well-being. We believe this is not a winners’ take all market. Many players will co-exist and each player will build its niche to capture consumer’s wallet share.

We are proud to back SleepyCat and continue to support Kabir and his team in this journey of building a challenger mattress brand. If you are building a consumer brand for the Indian market, we would love to hear from you. Please reach out to us on info@gembacapital.in

PS: For those who are intrigued by the brand name SleepyCat, we leave you with this picture to interpret!

Image source: Pixabay

Sweet Dreams!

Sources:

-> Sheela Foam(Sleepwell) Annual report 2017–18

-> Kurlon Annual Report 2017–18

->Zeebusiness - Household income in India

    Kamini Shivalkar

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