Fast-growing online-only mattress retailer Leesa Sleep LLC has its sights set on $1 billion in annual sales by 2022. The company just received a major investment designed to help it get there.
Leesa, No. 348 in the 2017 Internet Retailer Top 500, just raised a $23 million Series B funding round. This brings the total amount of funding raised by Leesa to $32 million. This round was led by investment company One Better Ventures.
One Better Ventures CEO John Replogle, who as part of this funding round also is now chairman of Leesa’s board, says Leesa is profitable and is planning on doubling its staff within the next two years.
“In particular we’re going to be building deeper analytics and systems capabilities, we’re going to continue to expand out our (research and development) team to advance product development and our consumer relationship team,” he says.
Leesa, a 2017 Internet Retailer Excellence Awards finalist in the E-Retail Growth category, grew its online sales to $76.0 million in 2016, up 166.7% from $28.5 million in 2015. The company is one of a handful of mattress retailers in the 2017 Top 500, including Casper Sleep (No. 182), Tuft & Needle (No. 287), and Mattress Firm Inc. (No. 317). Leesa also isn’t alone in receiving funding recently. In May and June, Casper raised a combined $245 million in two separate investments from Target Corp. (No. 20).
Despite the competition, Replogle says he’s confident that Leesa will continue its growth trajectory.
“We have an advantage when it comes to supply chain, we manage cash better, we invest better in marketing,” he says. “We’re going to dial up our marketing investment.” He says this funding round is “going to be spent on product development and new product launches and then organizational development, making sure we’re building consumer-friendly operating systems.”
Replogle says another reason for confidence is that shoppers are just beginning to buy mattresses online.
“We are in the very early innings of a fundamental shift in consumer behavior of how they buy,” he says. “While we’re only at 5% penetration of consumers buying mattresses direct, I think that could grow to 50%.”
On its website, Leesa boasts of having received more than 10,000 five-star online reviews. The retailer offers shoppers a 100-day trial period for mattresses purchased on its site or through Amazon.com Inc. Shoppers who are unsatisfied with their purchase during that 100-day trial period can return a mattress for a full refund.