Online mattress retailer Emma defies consumer slump with record results

Dennis Schmoltzi (left) and Manuel Müller

The founders of the online retailer Emma Sleep observe the development of new mattresses in the laboratory.

Dusseldorf The online mattress retailer Emma once again closed the past year with record sales. “The past year was not easy, the entire industry suffered from the difficult economic conditions,” says co-founder Dennis Schmoltzi of the Handelsblatt. “We are therefore all the more pleased that we have once again clearly exceeded our own expectations and have grown more strongly than originally planned.”

The company increased its sales in 2022 by 35 percent from 645 to 873 million euros and sold 2.3 million mattresses, most of which it produced itself. The sales target was 800 million euros.

According to its own statements, the company has consistently made a profit before taxes for five years. “We can finance our millions in research and development investments from our own profits,” says Schmoltzi. Since 2020, 50.1 percent of the start-up has belonged to the Haniel family company, with Schmoltzi and his co-founder Manuel Müller holding the rest of the shares.

Alongside the German market leader Bett1, Emma is the only major online retailer that has survived the boom in the mattress trade in Germany – and the only one that continues to grow at double-digit rates. At times, more than a dozen start-ups fought for the market, many of which had to file for bankruptcy.

Top jobs of the day

Find the best jobs now and
be notified by email.

The hype was triggered nine years ago by the US company Casper, which expanded with prominent investors such as Leonardo DiCaprio and was valued at $750 million just three years after it was founded. But now the former star of the industry has crashed and withdrawn from Europe. The British company Eve Sleep, which left Germany in 2018, had a similar experience. In the meantime, Eve Sleep has gone through bankruptcy.

Emma has triple digit growth rates in South America

The German pioneer of mattresses sold online, the company Bett1 of the founder Adam Szpyt, made a turnover of more than 180 million euros in Germany with its mattress Bodyguard at its best. But even at Bett1, sales have been falling for years and should now only be around 130 million euros.

Emma, ​​on the other hand, is growing worldwide and now sells mattresses in around 30 countries. The company now sells its products not only in its own web shops and on online marketplaces, but also in the shops of more than 200 retailers. However, according to co-founder Müller, Emma still makes more than 80 percent of sales online.

>> Read also: Financing for German start-ups is collapsing

The growth rates are particularly high in South America. In Mexico, for example, where the company also has its own branch, sales grew by 179 percent last year. However, business there has so far been at a very low level, with Emma still generating around 80 percent of its sales in Europe.

In the home market of Germany, however, the boom seems to have slowed down somewhat. Even when asked, the Emma management did not give any figures for the German market. It speaks only vaguely of further growth. Most recently, Emma’s turnover in Germany was estimated at around 80 million euros. The retailer is currently offering high discounts in the online shop.

Corona pandemic is slowing down business in China

The company is also experiencing a setback in China. The country had actually proclaimed it an expansion target last year, it wanted to open at least 30 stores per year with a franchise system. The shops should then become a role model for other countries. But the difficult economic conditions in China and the restrictions resulting from the corona pandemic have caused disillusionment.

So far, Emma has only five stores in China. “Our franchise partners have a hard time running the business profitably because many people don’t go out for fear of infection and therefore there are no customers,” explains co-founder Müller. “But if you want to be a global brand, you have to be in China,” he says, confirming the company’s ambitions.

Even though China is not yet a model for success, Emma has now opened her first store in Europe, in the Mall of the Netherlands near The Hague. But the expansion here should be cautious. “This year we will selectively open up to one or two more stores in Europe, since we are still developing the strategy,” says Müller. The store in the Netherlands is a first test for this.

>> Read also: the E-commerce could grow faster due to inflation

Like other mattress retailers, Emma grants customers the right to return the mattress purchased online within 100 days. In order not to have to dispose of these returned mattresses, the company has now turned it into a new business: Under the name “Second Life” it now offers reprocessed mattresses at lower prices.

This not only opens up a new clientele of price-conscious customers, it also helps in efforts to reduce greenhouse gas emissions. That’s not so easy in the industry, Müller admits. “We have to push our suppliers to use a higher proportion of recycled content.” The aim is to reduce CO2 emissions per product by ten percent every year. “And last year we more than fulfilled that goal,” says Müller.

More: Founders need to know these tips from investors for the next round of financing

source site-11