Businessmodel of Casper

Customer Segments

Casper has a mass market business model, with no significant differentiation between customer segments. The company targets its offering at anyone who wants a quality bed.

Value Proposition

Casper offers four primary value propositions: innovation, cost reduction, risk reduction, and brand/status.

The company places a strong emphasis on innovation. It spent over a year developing the technology for its mattress, which consists of a layer of dunlop latex foam over a layer of pressure-relieving memory foam. It is the first mattress brand to combine the two materials. Because the latex material is breathable, its contouring to sleepers’ bodies does not lead to the overheating that an all-memory foam surface often creates. That said, it provides enough sink that users feel completely supported by the memory foam below. Lastly, its springy nature prevents the feeling of being stuck. Casper’s other sleep products are cutting-edge as well. Its sheets consist of extra-long staple Supima cotton, which results in less tearing, and its pillows have low-friction fibers, resulting in springiness.

The company reduces costs in a variety of ways. It offers a 100-night trial of its mattresses. If customers do not like it they can return it for a full refund, with company employees picking it up at no extra cost. Casper offers interest-free financing on orders so customers can easily make monthly payments. Lastly, the company’s direct sales model eliminates inflated, commission-driven prices.

The company reduces risk through high quality standards. At every stage of the development process, it has volunteers evaluate and review prototypes so it can get a sense of what the average consumer would think. In 2015 it started Casper Labs, a program through which customers can confidentially test forthcoming products. Casper promises that unlike most mattress products, its offerings do not have chemical flame retardants, relying instead on mechanical fire sock composed from silica threads. Furthermore, it uses a Greenguard-certified, water-based adhesive for foam lamination instead of solvent-based adhesives. Lastly, its base foam and memory foam are certified Certipur and its latex foam has OEKO-TEX Standard 100 certification, and thus has few VOCs.

The company has established a strong brand due to its success. From the beginning, it received funding from high-profile investors, including celebrities Leonardo DiCaprio, Tobey Maguire, Adam Levine, and Ashton Kutcher. It is one of the fastest-growing consumer brands in history, achieving $1 million in sales its first month and generating $100 million in revenues in 2015, only its second year of operation. Its core product has received critical acclaim for its comfort and sleek design. Lastly, it has won many honors, including the BIG Innovation Award (2016), recognition on the Fast Company Innovation by Design list (2015), and recognition as one of Time’s “25 Best Inventions of 2015”.

Channels

Casper’s main channel is its website. It also sells its products in the stores, catalog, and website of furniture retailer West Elm. The company promotes its offering through its social media pages, advertising, participation in conferences, and showrooms in New York City, Los Angeles, and London, where customers can test out its mattresses.

Customer Relationships

Casper’s customer relationship is primarily of a self-service nature. Customers utilize the product while having limited interaction with employees. The company’s website provides answers to frequently asked questions. That said, there is a personal assistance component in the form of phone (calling and text), e-mail, and live chat support.

Key Activities

Casper’s business model entails designing and developing its products for customers.

Key Partners

Casper’s main partners are the third-party manufacturers in Georgia and Pennsylvania that assemble and produce its products. The company forms partnerships from time-to-time to enhance service for its customers; for example, in fall 2014 it teamed with driving service Uber to offer a temporary promotion in which Uber delivered its mattresses to customers in New York City.

Key Resources

Casper’s main resources are its human resources, namely the product engineers that design and develop its offerings.

As a relatively new startup it has relied heavily on funding from outside parties, raising $71.2 million from 21 investors as of June 2015.

Cost Structure

Casper has a value-driven structure, aiming to provide a premium proposition through frequent product enhancements. Its biggest cost driver is likely sales/marketing, a fixed cost. Other major drivers are in the areas of research/development and product development, both fixed costs.

Revenue Streams

Casper has one revenue stream: revenues it generates from the sale of its products. Its mattresses come in six different sizes varying in price from $500 to $950.