For investors who are happy to look at or invest in IPO s , today is the first dealing date for Eve Sleep (epic code EVE).
The full admission document can be found here
Briefly it offers mattresses and related bedroom products via the internet only. So it is a pure play internet retailer.
Its main attraction is offering quality mattresses on a 100 day trial basis. They can be returned free of charge and they will be picked up from your home.
Currently loss making. Sales grew from £2.6m in FY 2015 to £12m in FY 2016. The company is growing rapidly in the UK, Germany and France.
Trustpilot score 4.5 out of 5 and rated Excellent. Similarly Amazon.co.uk feedback rating is 4.5 stars out of 5.
This company has copied the business model of the successful US company Casper. Casper came on the scene nearly three years ago, and they have successfully expanded in the US. So Eve has a first mover advantage in Europe but with a business model that has to my mind been somewhat proven in the US. Little data is available for Casper as it is not a quoted company.
Big caveat. I would rank this share as risky and not for everyone. The IPO is raising £33m for the company and they will need this for the aggressive expansion plan. Profits could be some years away.
Declaration. I bought a small holding this morning.
I was one of the first eve customers in the UK to buy their mattress back in march 2015 - it was so good I've bought another 3 since!! If they have more happy customers like me then they will do very well.
I see eve as a fantastic investment potential and a bit like Gear4Music but they are starting with their core own branded product (with higher margins), with the opportunity to expand with other white label and or partner brands to expand product range. Most importantly they believe in test & learn but led by a strong brand message / creative so they will iterate fast, find many little winners, be locally relevant as they expand globally but not go off brand message, which means big wins over time.
I have also been super impressed with their online marketing and TV advertising mix - its clear they are doing a lot of test & learn to optimise TV and the channel 4 equity deal was inspired in return for free ads. The messaging is strong but most importantly they are driving towards a break even where this then becomes a fly wheel. Others like Trivago and purplebricks have done this brand building model on TV really well to build scale and direct traffic rather than paying margin to distributers. It's also a great one for bypassing competitors who lack scale or who rely on google for traffic which is certainly the case with all the traditional mattress and bricks and mortar stores. On that point, many of their competitors are loosing out to them on google paid search as a) eve have a better value prop / price b) the competitor sites are really weak / poor converting so will be stealing some easy wins there.
The use of amazon is really impressive as they can use it as a volume driver and way to build scale in new markets and volumes with manufacturers enabling them to expand easily in US and Europe. One thing i'm most interested to track is that although Casper in the US is the big online matress player here, increasingly i'm seeing the most successful ecommerce companies that scale internationally come from markets like Europe / Asia, as they have to believe in test & learn and localisation at their core, and the US brands struggle to compete and grow efficiently in non english speaking markets. If eve can grow scale in Europe then they will have a profitable business at scale, that they can then use to invest to grow and compete in markets like the USA. In my industry it is most clear with players like Booking.com and Trivago who are winning against Expedia & Tripadvisor due to this exact reason.
Right better stop typing and start buying some eve shares!
