Priyanka Salot, co-founder and CEO, of The Sleep Company on her story, strategy and dreams
In a little over four years since starting its operations in 2019 as a D2C brand, The Sleep Company reached the milestone of achieving an annual recurring revenue (ARR) of Rs 500 crore, emerging as a force to be reckoned with in a market dominated majorly by unorganised players and a handful of legacy brands.
It took the Mumbai-based brand only two and a half years to transition from a pure-play D2C player to an omnichannel business with its first outlet in June 2022 in Bengaluru, almost a thousand kilometres away from its home base. The reason for choosing Bengaluru as the starting point of its offline journey was because “it was and continues to be our biggest market,” co-founder Harshil Salot explained.
Today—26 months since its offline foray—the company has 100 stores across 30 cities, India’s fastest-growing D2C brand to reach this milestone in such a short span. The company boasts over 2 lakh customers.
Behind this rapid growth are innovative products and a smart strategy that combines the strength of both online and offline channels, effectively capitalising on the tendency of Indian customers to research online and purchase offline (ROPO).
The company’s products solve real-life problems, which resonates strongly not only with its customers but also with its celebrity brand ambassadors—Anil Kapoor, Karan Johar, Jim Sarbh and Mrunal Thakur, who have all been customers of the brand before becoming endorsers.
The brand is now gunning for profitability and hitting the Rs 1,000 crore milestone in two to three years.
In an exclusive interview, co-founder and CEO Priyanka Salot speaks about the company’s journey, its innovations and ambitions.
Give us an overview of your product profile.
At The Sleep Company, we are creating a sleep ecosystem for individuals, helping them improve their sleep quality. We have expanded our product line beyond mattresses to cater to the various needs of our customers. Our chair brand ‘Ergosmart by The Sleep Company’ has a range of office and gaming chairs. We also have pillows, cushions, recliner sofa, recliner beds, and bedding accessories such as comforters and bedsheets.
Which is your highest-selling product?
Our highest-selling products are our SmartGRID Mattresses and ergonomic chairs, both designed with our patented SmartGRID Technology. These products stand out for their superior comfort and support, redefining sleep and work experiences by offering unparalleled pressure relief and optimal body alignment.
Who are your customers? Where are they from?
Our core consumers are from metro cities, mostly salaried individuals, especially those working in the IT industry. We are also targeting a slightly younger audience employed in corporate settings. About 80% of our buyers are male and 60% of them are not parents.
How do you set yourself apart in this category which has some new brands and some established brands who are now upping their game?
When TSC was launched in 2019, India’s mattress industry was fragmented and outdated, largely dominated by foam and memory mattresses. The technology in mattresses remained stagnant since the 1960s and the launch of TSC marked a significant breakthrough in the industry.
While players in the industry focused on cost reduction and online sales, TSC remained committed towards customer happiness and prioritized fulfilling their needs. TSC’s patented SmartGRID technology, featuring a super-stretchy polymer that adjusts softness based on body type and sleeping position, sets us apart from other players in the category.
Right from the beginning of its operations, TSC is committed towards advanced technology and a customer-centric approach, which make us stand out in the industry. Besides, all our stores are company-owned, company-operated (COCO) stores, which further distinguishes us as we offer a superior customer experience through them.
Tell us about your omnichannel journey.
We started with a D2C model, integrating digital marketplaces with our website. Within just 2.5 years of starting our operations, we opened our first retail store in June 2022 and since then, have expanded to an omnichannel approach, blending physical and digital channels. To enhance our D2C experience, we expanded our on-ground presence. Having COCO stores allows total control over customer experiences, ensuring smooth delivery and addressing their queries effectively.
Around 75% of sales come from our omnichannel presence, including retail stores and online through our website.
Can you shine some light on the ROPO model?
We effectively utilize the ROPO (Research Online, Purchase Offline) model to enhance our growth and customer experience. Our analysis of consumer behaviour revealed that while consumers often research our products online, they prefer to experience them in our stores before making a purchase. Our COCO stores help us engage with our customers, as we provide them with a superior, hands-on product experience. Our ‘sleep labs’ at experience centres let customers engage directly with our patented technology, reinforcing the quality and comfort that sets us apart. This approach helps address consumer queries and challenges directly and ensures a seamless and engaging shopping experience.
Tell us about your recent fundraising.
The company has so far raised Rs 184 crore in a Series C funding round from Premji Invest and Fireside Ventures in December 2023, Rs177 crore in a Series B funding round led by Premji Invest, Fireside Ventures, and Alteria Capital, and Rs 13.4 crore in a pre-Series A funding round.
How are you planning to use the recent funds raised?
We last raised funds in December 2023 and we have been using the capital to strengthen our offline expansion. Besides, the funds will be used to diversify product offerings and product innovation. Given our focus on creating awareness about improving sleep quality, we will also energise marketing efforts to enhance brand visibility, with a significant focus on tier 1 and tier 2 markets.
What is your marketing focus this year?
For the financial year (FY) 2025, we have a budget of Rs 80 to Rs85 crore and this is centred towards a media mix tailored for each market to ensure the messaging effectively resonates with the audience. We extensively focus on performance marketing, leveraging digital platforms like YouTube, Facebook and Instagram, and regional media, including print advertisements, to maximize reach and engagement.
We will also look to heavily invest in influencer partnerships. As we look to expand to tier 2 cities, advertising campaigns will play a key role in emphasizing accessibility and comfort among the audience.
Currently, around 80-85% of our budget is dedicated to digital platforms, with the remaining 15-20% allocated to traditional media.
How do you measure the effectiveness of marketing spend?
To measure the success and ROI, we use a range of metrics tailored to each channel. We focus on Click-Through Rate (CTR), Conversion Rate, Cost Per Acquisition (CPA), and Return on Ad Spend (ROAS) for any engagement on digital channels. We assess influencer partnerships through Engagement Rate, Reach and Impressions, Referral Traffic, and sales generated.
We measure the effectiveness of traditional media engagement using Brand Awareness surveys, Reach and Frequency, Sales Uplift, and Cost Per Thousand Impressions (CPM). For regional campaigns, we monitor Market Penetration, Customer Acquisition Cost (CAC), and Sales Growth. Lastly, Experience centres are evaluated by Foot Traffic, Sales Conversion Rate, Customer Satisfaction Scores, and Repeat Visits.
Some competitors offer trials and returns of mattresses. What do you offer?
At TSC, we do provide a 100-night free trial to our customers buying SmartGRID mattresses. Research suggests that it takes at least 3-4 weeks for one’s body to adjust to the change in mattress. However, if our customers are not completely satisfied within 100 nights of sleeping, we offer a full refund on the returned products.
Are you mulling an Initial Public Offering (IPO)?
There are no immediate plans for an IPO but we aspire to go public in the next 2-3 years.
Your growth strategy?
We focus on the requirements of consumers and understand regional preferences. In line with this, we will continue to focus on product innovation and solidify our position in the Comfort-tech industry. Besides, we remain committed to educating consumers about the importance of quality sleep and the benefits of SmartGRID technology in enhancing it.
In the next 12 months, we also aim to double our store count to 200 from the current 100 stores through strategic market expansion across the country. With this, we aim to achieve profitability in FY25, while focusing on the quality of customer experience.
Which geographies will you be focusing on?
We plan to expand our footprint to 50 cities by the end of 2024. We plan to focus on tier 1, tier 2 and tier 3 cities and penetrate more metros. Through this, we want to ensure that our experience centres are within 10-minute driving distance to add convenience for our customers.
You claim that all TSC stores have been EBIDTA (Earnings Before Interest, Taxes, Depreciation, and Amortization) positive since the beginning of their operations…
Yes, all our stores have been EBIDTA profitable and we attribute this success to our strong operational excellence and sustainable retail model. Our COCO model allows us to take control of customer-centric strategies and inventory management. Besides, our strategic selection of store locations helps us remain focused on delivering to customers’ needs basis regional preferences. All these positively contribute to our bottom line.
You recently crossed Rs 500 crore Annual Recurring Revenue (ARR). What next from here?
We have achieved Rs 500 crore ARR in just 4.5 years since beginning our operations and this is a significant milestone for us. We are one of the fastest Indian D2C brands to achieve the milestone of having 100 COCO stores in just two years since venturing into offline retail. We are well positioned to reach Rs1000 crore mark in the next 2-3 years, and this will be driven by product innovation and market expansion. We are focused towards strengthening our omnichannel presence and delivering a seamless nationwide sleep experience.
