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The young mattress company Tuft & Needle already gets 25 percent of its sales through Amazon. Soon it’ll find out what happens if it outfits a store with Amazon technology, too.
The self-funded startup — which generated the vast majority of its 2016 revenue through online sales — plans to open its fourth store this October in Amazon’s hometown of Seattle.
Inside, customers will find tablets to read product reviews from Amazon; Alexa-powered Echo devices programmed to answer customer questions; QR codes to enable one-click purchasing through the Amazon app; and, eventually, the company hopes, the perk of two-hour delivery through Amazon’s Prime Now service, too.
While some established consumer brands continue to view Amazon warily, Tuft & Needle is trying to double down on the relationship.
“We’ve had a lot of internal debate about this since the beginning: The approach to resist Amazon as a force and see how we can go head-to-head against it,” said Daehee Park, Tuft & Needle’s co-founder. “But where we’re at right now, we’ve decided why not just embrace them. It is the future of retail and e-commerce.”
“We focus on what we’re good at,” he added, “and plug in Amazon technology for the rest.”
The initiative comes as the online bed-in-a-box industry — where companies ship folded foam mattresses in boxes to customer doors — appears to be getting even more competitive.
New York City-based Casper raised $170 million recently in an investment round led by Target, after talks to sell the startup to the giant retailer fell through. Mattress startup Leesa took on a $23 million investment and another startup, Purple, raised $90 million in a reverse merger that will make it a publicly traded company.
Tuft & Needle hasn’t raised venture capital, and has largely built its business off of profits, execs say. Now, the company is trying to add differentiation by not only building its own retail stores so customers can try before buying, but also by bringing some of the best of the online world to them — even if some of it feels a touch gimmicky.
Customers who order at the new Seattle store will receive one-day shipping through Amazon Prime if they are members. The startup is willing to forfeit the better margins that come with selling the mattress directly from its own inventory in order to give customers what it thinks is a better delivery experience through Amazon.
Tuft & Needle is adding the tablets, Echos and QR codes to the store without Amazon’s involvement. But it will need the e-commerce giant as an official partner if it’s going to be able to have its mattresses qualify for two-hour delivery through Prime Now.
How many people really need a mattress that quickly? The results of one previous Tuft & Needle experiment resulted in more than you might think.
Typically, around 28 percent of shoppers who visit a Tuft & Needle store make a purchase before leaving. When the startup tested a same-day delivery offering, that conversion rate increased by nearly 50 percent.
This article originally appeared on Recode.net.
