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216: Their Startup Mentality Has Helped BEDGEAR Become One of the Fastest Growing Sleep Brands

Written by Rob Stott

May 14, 2024

Founded in 2009, BEDGEAR has quickly become one of the fastest-growing performance sleep brands in the world, and it’s no accident either. While still a new brand in this category, CEO and Founder Eugene Alletto hasn’t allowed his team to shed the startup mentality that allowed them to get to this point.


 

Rob Stott: All right, we are back on the Independent Thinking Podcast and real pleased right now and appreciate being joined by Eugene Alletto, founder and CEO of BEDGEAR, calling in from the road. You know you’re a working man when you’re calling in, just getting off a plane and still finding time to do a podcast. I appreciate it, man.

Eugene Alletto: Absolutely. It’s fun to be with you. And in fact, I can’t believe this, but our new factory and warehouse in Salt Lake City that we just opened up is like 10 minutes from the airport, so it’s pretty damn convenient. We’re excited because we know Nationwide, just in the name, Nationwide, we are too now nationwide. So we have now manufacturing and distribution right here on the West Coast.

Rob Stott: Yeah. And actually didn’t dawn on me until you’re mentioning that, as we’re talking, just coming off a prime time. And I know that was a big point of emphasis, the fact that you guys had really well covered on the East coast, but the new factory out there and everything, that’s a big opportunity and moment for those on the West coast for them to know that coast-to-Coast service and quick turnarounds for you guys on the horizon. Fully functional up and running, right? Is that right?

Eugene Alletto: 100%. Yeah. So we’re manufacturing all of the pillows and mattresses here in Salt Lake. We have redundancy now, so that means that god forbid there’s a problem in our South Carolina facility. We didn’t want to go too far west to California where it would be hard to backhaul. So we’re in a really cool tech area near the airport. Believe it or not, because of digital and we’re crushing it with a lot of dealers that really understand how to lean into digital, we want to be 24 to 30 hours to anywhere in America for the ability to do dropship and what’s called extended aisle, right?

Rob Stott: Yep.

Eugene Alletto: So example of that is our sheet business right now is off the charts. So we have retailers that do an amazing job with our protectors or our pillows or our mattresses, And then for some reason they just think it’s like the customer’s not going to buy a pair of sheets. But here’s what’s crazy is that they’ll go home, they’ll register their product with us on our website and they’ll buy sheets from us even though we’re not soliciting them in terms of bottom funnel tactics. And they’ll buy from us because they just bought an adjustable base from one of the Nationwide dealers in a Tempur-Pedic mattress, and their freaking sheets keep popping off their bed. So they got zero G and a lot of hassle. So we say zero G, zero hassle.

Rob Stott: No, that’s incredible. And goes to point two, right? Completing that sale. You got to think of it end to end as a retail sales floor associate there in the bedding space and I know you guys have it all covered, no pun intended there in the mattress space. So look forward to diving into that further with you. I can ask the question, but knowing that you guys are in the process of getting that factory up and going and well, it is up and going. Business going well today for BEDGEAR, I have to imagine?

Eugene Alletto: Yeah, so we’ve had year-over-year growth the last three years. This year is still strong. We’re not seeing a significant slide. What’s interesting is our retailers are, some more worse than others. What I contributed to is some, I’m assuming, may have slow down their advertising. Some may not be digitally savvy in spending that advertising dollars. And then I also find that some are so focused on trying to bring back the low end and they’re spending money and time. That customer’s online and no matter what you do, they’re not going to get in their car to go buy a $399 mattress in volume. Of course you’re going to sell some, but I don’t know if that customer’s coming back, right? So what I think we’ve done well is to stay consistent with who we are and what we are. And so consumers are really out in the market looking for the best sleep, the best recovery. They have a hard time finding that online, right?

The DTC brands will tell you, even the Nectar in terms of what they just sold, the billion dollars, which I’m so pleased, and I think it was a great acquisition for Ashley. But if you look at Ashley’s business online, most of their mattresses are the chime beds for 399 and 499. Most of the nectar is that 699. And when they try to get to 2000 bucks, it falls off pretty hard, right? So I think the retailers have a significant opportunity right now to talk value but not think value is 399, but think value is a couple thousand bucks and sell sleep, right?

Rob Stott: Right. I was going to save this for later, but I like diving into it early and getting the meat of this upfront for the listener. The things that they’re doing, when that customer comes into your store, there’s intent there, right? There’s an expectation online I think of the, I don’t want to call it quality, but the level of where a customer feels comfortable making that type of purchase, a sleep purchase online. But once it gets to that certain point, they want to come in the store, have more of a field test things out before they do it. Any advice there as far as what they could do driving the customer in or when they’re in ensuring they close that sale?

Eugene Alletto: Yeah, so the one thing I find that why we were attracted to Nationwide and the dealers is forward-thinking. So the one thing I love about Nationwide is you guys offer web services, you offer digital marketing, you offer in-store signage and frankly you offer help with finance, get that first and second tier finance. I don’t find all your deals take advantage of it. And even when I speak to them, I still can’t get my head around because what’s driving our business is our website. People are snacking like crazy on our content. But not everybody converts online, to your point, they go to store. So if you have a shitty online experience because you just haven’t gotten around to it, you’re going to struggle with the guy in town who may not be a Nationwide dealer but actually has a good reasonable website and puts a brand page up for BEDGEAR.

People shop our shit all the time. People are always looking for the cool side to the pillow, need a pair of sheets popping off or they’re scratchy. Not everybody’s looking just for a mattress, they’re looking for other sleep products and you’re not even in the consideration set because you’re not driving any sort of messaging online. So what I would share is I think the big growth opportunity this year, even though things are slow and sluggish and people are stressed is this is the time to double down. If you’re not going to go out of business this year or next year, “Stop feeling sorry for yourself.” Is what I tell my team and get your out there and go make rain. And the best way to do it is to where’s the customer? The customer’s front door is your website, front door is your social. You’ve heard it now for 10 plus years, what are you waiting for?

We’re happy to help by the way. Financially, we’ve told every one of your dealers, “Invest in our program and we’ll work with you and Nationwide to start doing top of funnel tactics and then you come in with that bottom funnel.” All that means, for those that don’t know top of funnel, is we come in and say brand awareness campaigns, “Hey, go over here, go to Sleepbit in California and do some great shit.” And they’ll come in and say, “Now available in stock in a special deal.” And be able to convert those customers. That’s what I’m encouraging.

Rob Stott: The point you make there too is that I don’t think many of them may not connect the dots on necessarily and if they were just at prime time, they know whether they liked it or not, we hammered them over the head with digital, right? So we launched this one shop program that kind of simplified the story Nationwide’s trying to tell. But what wasn’t necessarily folded into that is that the brands like BEDGEAR are supporting this as well on your end. You mentioned that top of funnel. The awareness for the retailer to know that you have brands out there BEDGEAR that are pushing customers to your website and they’re going to go from that BEDGEAR experience to what you have as an online retailer. And if there’s a disconnect there, that’s where you’re likely to lose customers, right?

And you mentioned the way that some retailers are going about it and having, I’ll call it an elevated online experience, but it doesn’t need to be overthought either, right? You can really drive yourself crazy with what you think a solid website experience could look like. But from your seat, what are the one, two, or three important things that online experience should have to make it an optimized one for that retailer?

Eugene Alletto: So look, for those that have bought our product, and for those that have sold or have looked at our product, we sell energy. We’re not selling sleep. We want you to be more awake and less sleepy to do the shit that you do when you wake up. That’s who we are. If I go to your website and you just have some crappy photo of a mattress protector at 199, what does that tell the customer? You’re not selling the bed your sizzle, right? So what we’ve done with Nationwide from a content perspective is that we’re willing to invest in their platform. So either if they’re not doing it through you and they have their own sites, why don’t they have a landing page?

It’s simple. We’ll do all the work, we’ll serve it up. All you got to do is drop it in to your website. Because the one thing that happens when people are shopping a brand and shopping a look, they want to feel what the brand is about. They want to connect. So the first things that we always tell people is, “If you don’t want to lose the customer, that you may have the product in the store and they never come in there and they drive to the next town. Because the next town may have a retail that’s got a particular brand page from BEDGEAR and Tempur-Pedic as an example.” So we say, “Always start with that, make sure that you’re representing the brand appropriately online so that people can actually start to come and see what you’re doing.” That’s really important.

The second thing that we always like to remind people is that you have to align with the in-store piece. Because now that if I can do things online and you don’t have the right in-store signage that digitizes the experience and they walk in. And I’m just using a mattress protector because it’s boring. And it’s in some random package from bed, you’re sitting on a shelf and they don’t have the same sizzle that got them excited online, now you have to do a real add-on pitch. As opposed to a customer saying, “I’ll take it.” So that in-store experience with signage and our displays that we make available to the dealers of Nationwide, it really needs to be taken advantage of. Don’t just say, “Oh, I’m okay, I just need some pillows and some leeway pads. I’m good.”

Because we have dealers that are selling 108%, 110% attachment on protectors, 80%, 90% on pillows, 50% on adjustable base sheets. This is real. Our mattresses, we did these split heads. We have dealers that are like, “Yeah, we’re not really sure about split head queen.” If you saw how many split head queens we’re selling, it’s insane. By the way, those average tickets are $6,000 to $8,000 for every one of those mattress sales. And the reason I bring that up is that after you have the online experience and they choose to come to you, if your shit’s boring inside the store, it’s still a struggle. And then if you don’t have merchandise that’s trending right now, like Split Head Queens are trending. And right now when you look at a company like a Sleep Number who’s somewhat vulnerable in the marketplace, why are we not trying to personalize products so that the customers who buy from Sleep number have an alternative.

They don’t need another Air Mattress company, but what customers are going there is for personal fit. They want both sides of the beds to be personalized to them. And your dealers have that option with a BEDGEAR, but for whatever reason, they don’t look at Sleep Number’s competition. But Sleep Number still does a couple of billion dollars in America. What the hell are we doing? We’re so stressed out about Tempur-Pedic buying Mattress Firm, but you still got a billion dollars that’s in your neighborhood that all you got to do is pay attention to it. And so you said how business is? Who cares how business is. What’s more important is what are you doing to get the business in right now? So that’s what I like to pitch.

Rob Stott: I love it. And the passion that’s obvious about it is something that your passion clearly bleeds through the brand itself too, right? Because I think you guys have what’s a really unique and awesome story dating back, not an old brand by any means at all, right? I’d call you almost an infant in this industry, right?

Eugene Alletto: Absolutely.

Rob Stott: So dive into that a little bit about the launching this brand and the story behind it. Because I think that’s important for people to know too.

Eugene Alletto: Right now, our goal is we got to keep our company as a startup, right? And if you think of yourself as a startup, what kind of energy does that really drive, right? Everybody’s always trying to grow, trying to be more profitable. But if you don’t want to act like a startup today, it’s hard to get 25 to 30 year olds to join you. It’s hard to have a diverse group of people in the company. It’s hard, hard, hard. But what attracts people and customers is a startup mode. So I would tell you that what really drives our business is the fact that we don’t look at ourselves as 10 years old. We literally look at ourselves like we were born only a couple of years ago and we have something to prove. So innovation is what we bring to the industry, that’s what gave us the right to win at the beginning. And that innovation was done in a few ways.

One was in-store experience that was our critical and unique value proposition for the product. If you look at all the stuff that’s in the market for pillows, sheets and protectors, you can buy that shit at Walmart and Target all day long. There is a very hard place to go buy stuff today that’s better product. And by the way, the product doesn’t even look differentiated. As an example is you go to Walmart today, you can buy a cloud pillow from Walmart from a company called Tempur-Pedic at Walmart for $69 today. Why is that? Because even Walmart realized, even though our channel, which is furniture and bedding that has salespeople and advertising, they’re going to give that shit away. They’re going to give pillows away. They’re going to give sheets and protectors away. They’re going to struggle to think, “Oh no, I can’t sell a high price point BEDGEAR pillow.”

But Walmart, why? They have no salesperson. They got no sales process. They put it on a shelf. But the reason is that Bed Bath and Beyond went out. Macy’s doesn’t have a high-end pillow program in their stores. And what happens is the customer has been displaced. And so they walk into a mattress or bedding shop and what the bedding shop doesn’t realize, and what the salesperson may be afraid is if I add on a pillow or ask for more stuff, the finance may be a problem, the customer may not have the money, you name it. But a lot of times it’s not the consumer, it’s the way we feel. So I always tell people, “Stop being stressed about adding on and realize these are bedding essentials. You need this stuff to get a good night’s sleep.”

So what BEDGEAR and our right to win was, we pushed the envelope. Our number one selling pillow was $300 over Christmas. It is still in our top 10. I couldn’t get one retailer to buy it. It’s called our Night Ice Pillow. Now the retailers are buying it. So an example, The Brick in Canada, not a high-end company. Amazing, they were our first customer in Canada so we’re very loyal to them. We love them. We have a great deal of other dealers now up in Canada. So the Canadians love our stuff, but they’re not a high-end store. Their number one pillow is a $300 pillow.

Rob Stott: Wow.

Eugene Alletto: Do you get the point, right?

Rob Stott: Yeah.

Eugene Alletto: So what’s our right to win? We’re not going to be afraid of price and value, but what we’re going to do is make sure that the consumer sees that by us supporting the channel of distribution, which is high touch. Literally you walk in, you’ve got a salesperson, you got a professional that could teach you this. And so I think what I would tell you is we emphasize in-store experience, we then make sure that our digital footprint is out there. The only company we spend more money than anybody that’s selling through wholesale when it comes to pillow sheets and protectors. We spend millions of dollars on advertising and don’t promote it. We don’t spend money in furniture today to tell you that we drive traffic. That’s not our game. What we do is we say, “Look, we want to create brand awareness so that we can hold UPP pricing like Sonos and Bose so when you walk in, it’s the same price everywhere.” And that’s how we’ve been able to win. And it’s taken us 10 years to get there.

Rob Stott: Yeah. And I mean everything you’re mentioning is facets of the business that an independent retailer can leverage in their own stores. It’s as simple as that, but the fact is, are they doing it, right? Seeing that you guys have that commitment I think is important for the audience to hear. But also shows too that there’s more than just them supporting their business. They’re out there doing what they do, but the brands care. And like a BEDGEAR, do it, you can too. Because you understand, right? You understand that you’re not going to get that high touch experience at a Walmart. The customer isn’t going to really understand what the brand means or what it stands for. They came to you for a reason, whether it’s they saw the BEDGEAR page on the retailer’s website or they found the retailer through your website. Ensuring that they have that same high touch, they’re coming to you almost expecting that, right? So it’s more on the retailer then to match that experience and provide the right experience for that customer.

Eugene Alletto: What I would add to that too, Rob, is that the reviews are so important.

Rob Stott: I’m glad you brought it up. Yeah.

Eugene Alletto: We have 200,000 reviews that were unsolicited. So think about this. I had somebody from our industry, they were on the wholesale side most of their career, and then they did retail before they retired, before they left the industry. And we had this debate, the guy said to me, “You’re not a brand. You’re not a brand.” I said, “Okay, well what’s a brand?” “You’re a brand to the wholesale people. Everybody knows who you are in wholesale, but consumers don’t know.” So I kept my mouth shut because there was no arguing with him, he was a know-it-all. And by the way, for 10 years, this is what people told me. And 10 years ago we weren’t a brand, but now we actually are. We have 25 million customers in America that have our product. We ship close to three plus million units a year, right? Just think about that. Do the mattress math. There’s nobody shipping 3 million mattresses a year, right? Unless you put the top three guys together or you sell on low end perhaps.

The next thing that’s unique is we have over 200,000 reviews. All of that business comes from our retail partners. That’s why we freaking love them so much? They’re the ones that built the brand. So we were a wholesale brand. But the reason we’re loyal to retail and why we maintain margins and make sure that they are profitable is because we would rather them have the money than for us to spend all of our money on customer acquisition online because the value is I can be more efficient going through my retailers. And so for a consumer that $300 pillow, I would have to charge $500 if I had to sell it direct to a customer. So just to do the math.

So here’s the best part. The customer buys from a store, let’s say a Nationwide dealer. They go home with that pillow, that mattress, that protector. They then go online to register their product. They’ll reach out and give us a review. If they didn’t buy a pair of sheets, they’ll buy a pair of sheets from us. But think about this, the customer left their home, put on a pair of pants, drove to a store, picked up the product, drove it home, and they still decided to go online and interact with us. I don’t know about you, but that smells like a brand to me. We’re collecting 7,000 to 10,000 reviews a week from customers because we have velocity, right? So why am I sharing all this data about our company? It should be proprietary. I should keep my mouth shut. It’s because I want desperately for consumers, we’re all consumers, and I want our retailers to recognize that if they embrace this type of mindset of being entrepreneurial, of being on a startup mode, don’t listen to people telling you how bad businesses, don’t tell them about the…

What are you doing right here, right now, to install in your digital footprint in your store and the types of products that are going to create excitement? And then look back and say, “Okay, the last 10 years have actually been good.” Stop living day to day, hour to hour, weekend by weekend, holiday by holiday. There’s going to be days that suck, there’s going to be days that are great, and if we string them together and we do the right things together, all of a sudden, the next 10 years are going to be great. So that’s how I try to lead by example with our company.

Rob Stott: No, I love it. It feels like a mic drop moment kind of too. We could perfectly end there, but I want to keep going because I want to dive a little bit deeper into you and kind of the launching of this brand. Because it’s on your website and I dove into it and wanted to learn a little bit more about it too. The story almost feels like it connects to an independent retailer and sort of how they are, right? Very family first, they’re family owned businesses. But the way BEDGEAR kind of got its start I think kind of resonates with this audience. I wanted to give you a chance to share that a little bit about how the brand came about and your story as a person too.

Eugene Alletto: Well, thank you for that. So yeah, I’ve been in home furnishings for my whole career, essentially. I did a little bit on Wall Street and I did painting before, you name it. But I had an opportunity to work with some really amazing retailers when I was a kid. Sleepies being one of them. That’s where we launched our program. And then before that was Siemens Furniture. Morty Siemens, Jeff Siemens. All you had to do is study the generational way of doing things, these two retailers absolute amazing. And what they put out there in terms of personnel. And I should add Macy’s as well because Macy’s was really, really good at the time in terms of a department store. And if you meet people from these companies, you will see that they’re still heavily, heavily doing the same things that were learned in these companies over the years.

If anybody thinks that you get here on your own, you’re full of shit. That was my playing field. That’s where I learned to play the game. What I think helped a lot is that I didn’t do well in school. I guess people say I was bored. But I really didn’t know how to learn. I’m a visual learner, which I didn’t know at the time, and you put me in a classroom and I was distracted and I didn’t do well. So I worked a lot even though I went to school, but I always had a job. I didn’t grow up in a family business. My dad passed away when I was 15. I was the oldest of four. My mom, thank God, was a nurse, was able to go back to work. And the one thing she taught us was never to be a victim. And that’s been with me my entire career.

So when things get screwed up or they’re hard, I don’t feel sorry for myself. I’m like, “Well that didn’t work. Let me move on and try something else.” And so I was on this tear in the furniture business and I kept seeing furniture protection being the big thing. At the time you used to spray it. So I bought a distributorship from Guardian for the Northeast and then bought a few more of their distribution states and learn the business there. And I tried desperately to get Guardian at the time to really stop pushing just the actual fabric protection and think about the bedding business. Because I kept seeing people spraying mattresses with actual chemical to protect them. And so from there, I watch people bring in mattress protectors and they put these stupid warranties like a piece of little cheese cloth, like terry cloth saying, “10 year warranty. Free replacements.” And I’m like, “This makes no sense. How could you give a 10 year warranty on a piece of fabric that’s this small for the next 10 years. If you wash it once, it’s going to fall apart.”

And then it kind of just went out of my mind. And then my son Alec, who’s now 26, and he had some allergies. And when we went to the doctor, they’re like, Hey, he’s got dust mite allergies. You got to go to this surgical supply store, throw this thing on a bed. It’s basically like a piece of plastic, it’ll solve his problem. And they were right, literally the next day he didn’t have all the nasal issues, but he was literally laying in a pool of sweat. And that’s where the dots connected. That moisture would go into his mattress, potentially dust mites were in there that were causing him to be disrupted. So I remember this whole mattress protector thing and I’m like, “Holy cow, why does nobody have good stuff to put on a mattress that not only protects a mattress, but provides a service to the consumer?”

So at that point, I was coaching lacrosse and an assistant with skiing, and I noticed all the materials that are being used in athletic, it’s obvious to all of us that synthetic fabrics are amazing what you can do with them, with moisture wicking, cooling and all of that. And I went to town, I took a piece of my son’s lacrosse pants and I sent it over to a friend of mine in Asia, and we analyzed it and went to Korea and Taiwan to figure out, how do we get fabric that’s wide enough to put on a mattress? Well, it turns out nobody was doing it. So this is where all of our patents started to come into play.

So we were the first company to bring wide width, circle knit in a particular denier yarn that wouldn’t heat you up, that would actually work and moisture wick and help you sleep better. And we started with mattress protectors. And just from there I got into the mattress game and I started seeing how people were laying on mattresses on their back on these big ugly Bolster pillows from the vendors. And I’m like, “This is crazy. People are laying in the store. Why don’t we try to sell them pillows and get them fit at the same time? So instead of them standing up at Bed Bath and Beyond looking for a sign from God that this is the right pillow for me.” So we started putting sales processes in place and Sleepies went from hating me to like, “Oh, I don’t want to sell these wee wee pads.” And all of a sudden when they started to see the customer satisfaction went through the roof, lower return rates on mattresses because they were getting fit for a mattress and a pillow, our business took off.

It sounds easy, but it was like years and years of just being around smart people and learning about packages at rooms to go and learning how to tell stories at Macy’s. And I should not leave out Jordan’s furniture. When I got in the furniture business in Patten, New England and working next to Elliot and ultimately now Josh Hadelman as well. Holy cow, are those people smart. And so when you look at our in-store experience and you look at how we tell stories, a lot of that was just learned just observing how Jordan’s Furniture did it. And then the last thing I’ll tell you is taking risk. For a retailer, there’s a guy named Irv Blumkin. If nobody’s ever met that guy, he’s not very tall, but man, he is so damn strong and dynamic. That guy, if he sees and smells something that’s innovative, even with his stores being so big, that guy will stop, drop and roll and give you an opportunity to try something. And guys like him, people like him are what makes our universe kind of spin.

I would tell you, that’s a big company, and if they can figure out how to take BEDGEAR and tell the story because they felt something. I would challenge all of your retailers like, “Hey, you know something, I’m going to get off my dead ass. I’m not going to listen to all the complaining. And we’re going to really get after this.”

Rob Stott: Yeah, no, it’s incredible. And you said it, the word that stands out to me there is story and y’all are telling a fantastic one. Clearly resonates with the team here and I know the members that are taking advantage of a lot of the services we talked about at the top and doing it right. Because the numbers don’t lie, they speak for themselves. And we’ve seen it, the ones that are leaning into it and leaning into you are having that success and seeing those numbers and the margins that come along with them. So no, we appreciate it. This was awesome to be able to do. I appreciate you taking the time and sharing the story and some of those tactics with us. I think this was a great one. So appreciate you taking the time, man.

Eugene Alletto: Thank you so much. It was good to meet you again.

Rob Stott: Yep.

Eugene Alletto: And everybody out there, let’s make this a great year. And thank you all for the support of our team and our company. We’re super grateful for you and enjoy the rest of your day.

Rob Stott: Awesome. You too.

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