The big business of helping people sleep better
More and more brands are tackling the $78 billion sleep business by offering personalization and tech-driven solutions to help us rest.
When Casper launched in 2014, the simple idea of stuffing a mattress in a box and selling it online seemed revolutionary. But today its everywhere, with more than 175 bed-in-a-box companies at one count.
The so-called “sleep economy” (which Casper described itself as the pioneer of in the paperwork for its 2020 IPO), is now awash with mattress brands, weighted blankets, and luxury bed linens. As the category grows, new entrants hoping to cash in on this $78 billion opportunity are seeing if they can convince us to bring new kinds of technology and innovations into the bedroom.
In April, Sandland launched a sleep remedy containing the cannabinoid CBN, designed for “restorative sleep, not knocking you out.” Proper, meanwhile, is a sleep brand launched in July 2020 that combines supplements with individual coaching, where customers are taught psychological techniques that can help to improve their sleep patterns. Eight Sleep has equipped its mattresses with sensors that can react to a room’s temperature, while also tracking the sleeper’s heart rate to let them know how well their most recent snooze went.
For most people, the answer to the question “have you ever had a terrible night’s sleep?” is going to be a resounding "yes." It’s estimated that as many as 65% of Americans suffer from some form of insomnia, ranging from “short-term” (lasting three months or less) to “chronic,” where sleep is affected at least three times per week and for a period of three months or longer.
The pandemic has only compounded our sleep struggles. According to the American Academy of Sleep Medicine, 20% of people surveyed said the stress of the pandemic was causing problems with their sleep when asked in the summer of 2020; by March of this year, when surveyed again, that number had shot up to 60%.
It’s no wonder, then, that people are looking for solutions – and for those who can afford it, there are plenty of premium options. While a Casper mattress costs just under $600, Eight Sleep’s cheapest tech-enabled version comes in at nearly $2,400. The popular sleep-tracking Oura ring, meanwhile, is priced at $300.
In an attempt to fix the neck pain she experienced in the mornings, Susana Saeliu says she purchased and returned seven different pillows from direct-to-consumer brands, legacy bedding companies, and off Amazon, before deciding to try and fix the problem herself.
She launched pillow brand Pluto in March 2018. The brand’s USP is the questionnaire it uses to collect data from customers, so an algorithm can recommend one of the 44 different pillow styles it offers. Saeliu says that by taking a personalized approach to pillow shopping, Pluto has been able to get its return rate down to just 7%, compared to the industry average’s 17%.
Its pillows can be as slim as 2” or as firm as “dry cement." “You wouldn’t believe how popular that request is. And they’re not able to find it in stores," she adds.
Saeliu says the pandemic has caused people to reflect on all aspects of their health and wellbeing, including sleep and the factors that might affect it. “And there’s more data around it too – people are tracking their sleep with their Oura rings,” she says.
Pluto has started out by trying to learn as much as possible about what might influence a customer’s pillow preferences, but its future plans include working with health practitioners to start collecting some hard evidence on how its pillows help people sleep.
Nancy Ramamurthi, the cofounder of Proper, agrees that personalized, tech-driven services are the types of products that will drive the sleep category forward. “Understanding the issues driving poor sleep is very complex, because of the variety of factors that are unique to the individual – everything from your biochemistry, your living situation, temperature, stress,” she says. “It’s not easy to fix with a one-size-fits-all solution.”
About a third of Proper’s customers book its sleep coaching service which comes as part of its vitamin subscription. The plan is to roll out a coaching-only service for customers who prefer to not take sleep supplements.
By augmenting their products and services with technology, sleep brands are able to improve the way they recommend items to customers, or empower them to track their own sleep metrics.
But it’s not just digital technology that is opening new doors for brands – innovation around materials is also driving new-and-improved sleep products. In the U.K., We Drifters sells pajamas that have been designed specifically for traveling, made using sweat-wicking bamboo and infused with “Vital Protection,” a natural insect repellent developed by performance fabric technology firm HLL Group.
The result, the brand says, is a set of pajamas that is 90% effective at repelling insects, without the sleep-disrupting odor of a more traditional insect spray, or the discomfort of having to get inside a silk liner when getting some shut-eye (particularly in hot or humid weather).
“More than ever now, sleep is seen as being as important as exercising and eating good food,” the brand’s founder Naudia Salmon says. “It’s a more holistic approach that people are taking. One of the messages we’re putting out is that you can care about your sleep when you travel – it’s not just for at home.”
For Pluto, rather than picking a single material (memory foam, feathers or latex) to make its pillows, has completely redesigned them to use a modular system. Each of the pillows contains a foam core - where the thickness and density is recommended based on a customer’s survey answers – wrapped in a cushion cover to create an additional layer.
The sleep economy is showing no signs of slowing down, as brands find new ways to optimize – and commoditize – this fundamental human experience. In December 2020, meditation app Calm hit a $2 billion valuation following a $75 million funding round, with heavyweight investors including Goldman Sachs and Lightspeed Venture Partners participating. By 2025, the market for sleep aids is expected to hit $112.7 billion.
Speaking to Crunchbase in February 2020, weighted blanket brand Gravity’s cofounder Mike Grillo described how big this opportunity is for brands. “Sleep is at a premium right now,” he said. “The notion that you can sell a product that is demonstrated to improve your sleep is very attractive to people.”
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