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The journalist spoke to all these founders and to marketing people, but didn't ask a fairly obvious question: What makes the mattress market so much weirder tha

The journalist spoke to all these founders and to marketing people, but didn't ask a fairly obvious question: What makes the mattress market so much weirder than for other products? Let's compare mattresses to big-screen TVs, which are also $1000+, infrequently purchased, bulky items: - The article says, "If consumers recognize a brand, it creates a situation where mattress stores are slashing prices to compete with each other." But how is that different for Samsung or LG TVs? - "The number of mattress manufacturers is close to 500," meaning in the US I presume. Why are there only 19 TV manufacturers that market in the U.S., and probably not many more in the whole world? - Why do mattress manufacturers obfuscate the model numbers so that "every one of the stores gets a slightly different mattress" making it impossible for consumers to compare? TVs aren't like that. LG's current lineup seems to be 11 different models for 65-inch TVs and 3 models for 60-inch TVs. It's perfectly easy to compare LG's prices online vs Best Buy vs other stores. So why are the mattress and TV markets so different? To take a stab at answering my own question, I think it's because mattresses are still mostly made locally in the US since they can't be shipped great distances (like from China), so they don't benefit from huge economies of scale and cheap labor. And many of those 500 manufacturers probably serve a niche geographical area, so they actually have less competition than TVs manufacturers. Hence they can get away with 300% markup whereas TVs manufacturers operate on tiny margins. Therefore TVs need to compete on features and price, but mattress manufacturers have traditionally used high-pressure tactics and obfuscation to make sales. Anyone have a better explanation?

verelo 9y ago
I’m pretty sure the answer is simple: TVs are hard to make, mattresses are very simple. Foam latex, it’s pretty much the simplest product you can fit in a box, and damage is probably not a concern as the product itself is what we use to protect most other products!
- alister 9y ago
  Sure, TVs are much harder to make than mattresses. I agree completely. But that doesn't explain why mattresses are so expensive and why we have 500 mattress manufacturers and obfuscated models and prices. In fact, your line of reasoning would lead to the opposite conclusion: Mattresses should be cheap, a commodity product dominated by 2 or 3 manufacturers who eke out a few percent margin, selling at a standard price. But that's not what we see.
  - TylerE 9y ago
    The materials probably aren't quite that cheap, and due to the bulk (a queen size mattress weights about 50-70lbs) there is natural price floor just of shipping expenses.
    - dx034 9y ago
      Shipping that from China to the US or Europe isn't expensive. From the port to the end customer is the most expensive part but even that won't be significant. Even washing machines (which are heavier and harder to transport) can be shipped for a relatively low price across long distances. I wouldn't expect shipping costs from China to the end customer to be more than $30 for any mattress.
      - 220V_USKettle 9y ago
        These types of mattresses have a limited shelf-life in their 'compressed' state and can only be stored within a specific temperature range. I say it is more akin to shipping produce than TVs. We don't get the majority of our veggies from a single farm for all of the US.
  - jccalhoun 9y ago
    I thought your question was why are there a ton of mattress companies but only a (relatively) few tv companies. As for why mattresses are so expensive, I think a lot of it is "because they can." I think there is also materials and such. A bed with two people in it might hold over 400 pounds for 8 hours a night 7 days a week for years. If a tv had to do that it might be more expensive too.
    - JoeAltmaier 9y ago
      A mattress is wires and springs. The load limit is irrelevant - a truck body can hold scores of tons for 50 years. We've solved that. I lean toward the 'because they can' argument, which means, what the market will bear.
  - 9y ago
pdonis 9y ago
You can easily test TV brands by going to a store and looking at them. You can't really test different mattress brands in a store; yes, you can lie on them, but in my experience at least, that doesn't give a very good prediction of what sleeping on the mattress long term will be like. The result is a standard asymmetric information scenario: the seller knows much more than the customer about the actual quality of the product. And standard microeconomics tells you that in such a situation, the market will be dominated by lemons: products that don't have to (and can't) complete on features and price, and are sold by "high-pressure tactics and obfuscation". The difference between the mattress market and an idealized market dominated by asymmetric information in standard microeconomic theory is that most people aren't willing to take the option that standard economics recommends for such a situation: don't buy at all. Most people consider a mattress to be a necessary purchase, not optional, so they have to just do the best they can in a highly imperfect market. (Similar remarks apply to, e.g., the used car market: most people who are shopping for a used car are doing it because they have to--they need a car and can't afford a new one.) Many other possible markets which would be dominated by asymmetric information if they existed, simply don't exist, because people can choose not to participate.
- tomerico 9y ago
  Another small observation - the properties you described (asymmetric information, obfuscation, and a necessary purchase) apply to many parts of the healthcare market. I wonder whether it means that this market is dominated by lemons.
  - colechristensen 9y ago
    "Lemons" is not so much of the problem in healthcare because of the (over)prevalence of litigation as a remedy for failures. I can't sue anybody for a year's salary if I don't like my mattress (I don't). Instead the market is dominated with inflated prices and mostly harmless procedures and tests. Sometimes the information isn't asymmetric, it's just difficult or sometimes just not a habit to try to find the best prices. Here's an example that blew my mind a while back: I was helping a friend with limited income afford medication. Generic Prozac, an extremely common drug. Here are the current prices at Costco (you'll find the same trend many other places). FLUOXETINE HCL 20 MG CAPSULE x100 $17.03 FLUOXETINE HCL 20 MG TABLET x90 $141.09 ($156.77 for 100, the price is listed for different values) Look at that, nearly a factor of 10! For the same drug in a gel cap instead of pressed into a tablet. This isn't cherry picking, you can find the same scale of differences anywhere. Sometimes a drug will be cheaper in a tablet, other times a cap. We had to call the doctor to get a prescription for the capsules, but for someone on a not-so-far-above-minimum wage job, that was a huge difference. I only figured this out because I was curious about the difference and wanted to find out the best price, then I was blown away when I saw the vast differences in price. Anyone _could_ do the same thing for all of their prescriptions, but insurance and apathy mean that nobody cares so the market is extremely inefficient.
chime 9y ago
> - The article says, "If consumers recognize a brand, it creates a situation where mattress stores are slashing prices to compete with each other." But how is that different for Samsung or LG TVs? I can speak for this because I've actually experienced this. When I went to a local mattress store and found a mattress I liked, I was unable to find it online by name/model. Only references I found were to the same mattress store chain. Each chain makes sure all of their mattress brand names are unique to them, to prevent the exact kind of price shopping I was trying to do. Oddly enough when I went to a few other local mattress stores, I found very similar mattresses as the one I liked before, under different names. E.g. What Chain A called 'Premium New Haven Sapphire Deluxe' was very similar to something Chain B called 'Silver Cooper Plush' and Chain C called 'Luxury Sunfire Extra Soft IV'. Now the reason this is different from Samsung/LG is that you can buy the same (or almost the same) Samsung at Walmart, Amazon, Costco, or Best Buy based on the rough specs (size - 60", type - LED, features - SmartTV). Can't really do this for mattresses because there's no 'New Haven Sapphire' in Chain B, C, or any site online.
- pbhjpbhj 9y ago
  Tech does get different model numbers when sold in different places sometimes too (in the UK). Usually there's small changes to the spec as well.
  - fabianhoward 9y ago
    I think that's fair enough though. If the product ships with a different plug attached then it makes sense to have a slightly different number. With most tech brands (Dell monitors spring to mind) that variation is consistent across their lineup and across the slightly different models they put out each year.
    - jowsie 9y ago
      Not sure if this is common with the higher end TV's, but with the more budget brands sold in supermarkets, it's not uncommon to find an otherwise identical model in multiple stores, but with slightly dithering model numbers, or in some cases, complete rebrand (box and badge).
smhg 9y ago
http://freakonomics.com/podcast/mattress-store-bubble/ http://freakonomics.com/podcast/mattress-store-bubble/ might be interesting listening material in this context
220V_USKettle 9y ago
Also, these types of mattresses have an expiration, and I doubt they are manufactured on demand. If they are not sold within a specified time and stored properly (not stuck in a hot warehouse or cargo container), they are useless. Also, mattresses are not currently being subsidized by adware/analytics apps and companies.
Tomte 9y ago
> Why do mattress manufacturers obfuscate the model numbers so that "every one of the stores gets a slightly different mattress" making it impossible for consumers to compare? TVs aren't like that. I can't speak for the US, but in Germany all kinds of electronic appliances (TVs, washing machines, toaster ovens) are regularly advertised in the two big electronics stores' brochures and newsletters, and the model numbers are very often nothing the manufacturer's website knows about.
thaumasiotes 9y ago
> Why do mattress manufacturers obfuscate the model numbers so that "every one of the stores gets a slightly different mattress" making it impossible for consumers to compare? TVs aren't like that. TVs can be like that. Costco is known for using different SKUs for what would otherwise be the same product.
mlrtime 9y ago
Mattress quality = subjective (how it feels) TV quality = objective, you can measure technical features.
the_gastropod 9y ago
I don't know if there's any merit to this, but I've always felt the mattress industry benefits from being a "soft target" like the wedding, funeral, education, child <anything> industries. The old "You spend 1/3rd of your life sleeping! Don't be stingy" marketing strategy is so convincing, consumers do not behave rationally. Higher price is assumed to be better, so there's little pressure to lowering price.
mmt 9y ago
Wow.. and here I've always thought people who pay $1000+ (USD) for either a mattress or for a TV were being grossly extravagant, even with Bay Area tech salaries. The extravagance of large-screen TVs is arguable, of course, especially if one has a particularly large room and/or regularly hosts large audiences, but mattresses.. When one can get even a brand-name mattress and box spring from Costco (with, I believe, no special restrictions on their usual, generous return policy) for on the order of $700, that people pay multiples of that prices still boggles my mind.

verelo 9y ago

I’m pretty sure the answer is simple: TVs are hard to make, mattresses are very simple. Foam latex, it’s pretty much the simplest product you can fit in a box, and damage is probably not a concern as the product itself is what we use to protect most other products!

alister 9y ago
Sure, TVs are much harder to make than mattresses. I agree completely. But that doesn't explain why mattresses are so expensive and why we have 500 mattress manufacturers and obfuscated models and prices. In fact, your line of reasoning would lead to the opposite conclusion: Mattresses should be cheap, a commodity product dominated by 2 or 3 manufacturers who eke out a few percent margin, selling at a standard price. But that's not what we see.
- TylerE 9y ago
  The materials probably aren't quite that cheap, and due to the bulk (a queen size mattress weights about 50-70lbs) there is natural price floor just of shipping expenses.
  - dx034 9y ago
    Shipping that from China to the US or Europe isn't expensive. From the port to the end customer is the most expensive part but even that won't be significant. Even washing machines (which are heavier and harder to transport) can be shipped for a relatively low price across long distances. I wouldn't expect shipping costs from China to the end customer to be more than $30 for any mattress.
    - 220V_USKettle 9y ago
      These types of mattresses have a limited shelf-life in their 'compressed' state and can only be stored within a specific temperature range. I say it is more akin to shipping produce than TVs. We don't get the majority of our veggies from a single farm for all of the US.
- jccalhoun 9y ago
  I thought your question was why are there a ton of mattress companies but only a (relatively) few tv companies. As for why mattresses are so expensive, I think a lot of it is "because they can." I think there is also materials and such. A bed with two people in it might hold over 400 pounds for 8 hours a night 7 days a week for years. If a tv had to do that it might be more expensive too.
  - JoeAltmaier 9y ago
    A mattress is wires and springs. The load limit is irrelevant - a truck body can hold scores of tons for 50 years. We've solved that. I lean toward the 'because they can' argument, which means, what the market will bear.
- 9y ago

pdonis 9y ago

You can easily test TV brands by going to a store and looking at them. You can't really test different mattress brands in a store; yes, you can lie on them, but in my experience at least, that doesn't give a very good prediction of what sleeping on the mattress long term will be like. The result is a standard asymmetric information scenario: the seller knows much more than the customer about the actual quality of the product. And standard microeconomics tells you that in such a situation, the market will be dominated by lemons: products that don't have to (and can't) complete on features and price, and are sold by "high-pressure tactics and obfuscation". The difference between the mattress market and an idealized market dominated by asymmetric information in standard microeconomic theory is that most people aren't willing to take the option that standard economics recommends for such a situation: don't buy at all. Most people consider a mattress to be a necessary purchase, not optional, so they have to just do the best they can in a highly imperfect market. (Similar remarks apply to, e.g., the used car market: most people who are shopping for a used car are doing it because they have to--they need a car and can't afford a new one.) Many other possible markets which would be dominated by asymmetric information if they existed, simply don't exist, because people can choose not to participate.

tomerico 9y ago
Another small observation - the properties you described (asymmetric information, obfuscation, and a necessary purchase) apply to many parts of the healthcare market. I wonder whether it means that this market is dominated by lemons.
- colechristensen 9y ago
  "Lemons" is not so much of the problem in healthcare because of the (over)prevalence of litigation as a remedy for failures. I can't sue anybody for a year's salary if I don't like my mattress (I don't). Instead the market is dominated with inflated prices and mostly harmless procedures and tests. Sometimes the information isn't asymmetric, it's just difficult or sometimes just not a habit to try to find the best prices. Here's an example that blew my mind a while back: I was helping a friend with limited income afford medication. Generic Prozac, an extremely common drug. Here are the current prices at Costco (you'll find the same trend many other places). FLUOXETINE HCL 20 MG CAPSULE x100 $17.03 FLUOXETINE HCL 20 MG TABLET x90 $141.09 ($156.77 for 100, the price is listed for different values) Look at that, nearly a factor of 10! For the same drug in a gel cap instead of pressed into a tablet. This isn't cherry picking, you can find the same scale of differences anywhere. Sometimes a drug will be cheaper in a tablet, other times a cap. We had to call the doctor to get a prescription for the capsules, but for someone on a not-so-far-above-minimum wage job, that was a huge difference. I only figured this out because I was curious about the difference and wanted to find out the best price, then I was blown away when I saw the vast differences in price. Anyone _could_ do the same thing for all of their prescriptions, but insurance and apathy mean that nobody cares so the market is extremely inefficient.

chime 9y ago

> - The article says, "If consumers recognize a brand, it creates a situation where mattress stores are slashing prices to compete with each other." But how is that different for Samsung or LG TVs? I can speak for this because I've actually experienced this. When I went to a local mattress store and found a mattress I liked, I was unable to find it online by name/model. Only references I found were to the same mattress store chain. Each chain makes sure all of their mattress brand names are unique to them, to prevent the exact kind of price shopping I was trying to do. Oddly enough when I went to a few other local mattress stores, I found very similar mattresses as the one I liked before, under different names. E.g. What Chain A called 'Premium New Haven Sapphire Deluxe' was very similar to something Chain B called 'Silver Cooper Plush' and Chain C called 'Luxury Sunfire Extra Soft IV'. Now the reason this is different from Samsung/LG is that you can buy the same (or almost the same) Samsung at Walmart, Amazon, Costco, or Best Buy based on the rough specs (size - 60", type - LED, features - SmartTV). Can't really do this for mattresses because there's no 'New Haven Sapphire' in Chain B, C, or any site online.

pbhjpbhj 9y ago
Tech does get different model numbers when sold in different places sometimes too (in the UK). Usually there's small changes to the spec as well.
- fabianhoward 9y ago
  I think that's fair enough though. If the product ships with a different plug attached then it makes sense to have a slightly different number. With most tech brands (Dell monitors spring to mind) that variation is consistent across their lineup and across the slightly different models they put out each year.
  - jowsie 9y ago
    Not sure if this is common with the higher end TV's, but with the more budget brands sold in supermarkets, it's not uncommon to find an otherwise identical model in multiple stores, but with slightly dithering model numbers, or in some cases, complete rebrand (box and badge).

smhg 9y ago

http://freakonomics.com/podcast/mattress-store-bubble/ http://freakonomics.com/podcast/mattress-store-bubble/ might be interesting listening material in this context

220V_USKettle 9y ago

Also, these types of mattresses have an expiration, and I doubt they are manufactured on demand. If they are not sold within a specified time and stored properly (not stuck in a hot warehouse or cargo container), they are useless. Also, mattresses are not currently being subsidized by adware/analytics apps and companies.

Tomte 9y ago

> Why do mattress manufacturers obfuscate the model numbers so that "every one of the stores gets a slightly different mattress" making it impossible for consumers to compare? TVs aren't like that. I can't speak for the US, but in Germany all kinds of electronic appliances (TVs, washing machines, toaster ovens) are regularly advertised in the two big electronics stores' brochures and newsletters, and the model numbers are very often nothing the manufacturer's website knows about.

thaumasiotes 9y ago

mlrtime 9y ago

Mattress quality = subjective (how it feels) TV quality = objective, you can measure technical features.

the_gastropod 9y ago

I don't know if there's any merit to this, but I've always felt the mattress industry benefits from being a "soft target" like the wedding, funeral, education, child <anything> industries. The old "You spend 1/3rd of your life sleeping! Don't be stingy" marketing strategy is so convincing, consumers do not behave rationally. Higher price is assumed to be better, so there's little pressure to lowering price.

mmt 9y ago

Wow.. and here I've always thought people who pay $1000+ (USD) for either a mattress or for a TV were being grossly extravagant, even with Bay Area tech salaries. The extravagance of large-screen TVs is arguable, of course, especially if one has a particularly large room and/or regularly hosts large audiences, but mattresses.. When one can get even a brand-name mattress and box spring from Costco (with, I believe, no special restrictions on their usual, generous return policy) for on the order of $700, that people pay multiples of that prices still boggles my mind.