Purple is a mattress, pillow and seat cushions manufacturer. It was founded by two brothers, Tony and Terry Pearce in 2015. However the company many say started years before this in 2013 when they patented new machines and now own 23 and counting trademarks, which are used in a wide variety of industries. But how have Purple been so successful, becoming one of the biggest manufacturers of mattresses?
Sharing Economy
It could be argued that some of its success relies down to the use of the sharing economy, Kickstarter. This is a sharing economy because people are sharing a resource, money, for a specific goal of trying to raise funds for a specific objective. This is one of the most common examples of a sharing economy. By utilising the sharing economy, it has allowed the brand to gain enough investment and reduce costs. For example, in 2016 they needed £25,000 for their pillow, one month later they raised over £2.6 million for the project (Kickstarter n.d). By using the platform, they have reduced overall costs and increased profitability in doing so. However, this is not new or innovative as anyone can do this, which is not giving them a competitive edge (Slater and Narver 1994). Thus I believe that this is a contributing factor not the main cause of their success.
New technology?
Part of their success is down to the way they had belief that they could change the way the industry does things. This led to the invention of Mattress Max (Purple n.d). This has enabled them to merge two or more pieces of elastic based materials into one complete mattress. This has occurred through Tony and Terry implementing a leadership style that allows creativity and allows people to change the way that they do things. Without leadership allowing creativity and allowing the barriers of change to be removed this would not occur (Reiter-Palmon & Illies, 2004). This could be down to the way that they have seen over the short-term gains and the potential benefits in the long run (Wang, Tsai & Tsai, 2014).
New digital business model?
Previously consumers have always either bought a bed and mattress together or bought them separately, however always from a shop/retailer. This is because consumers always want to try the mattress out first before they buy. Purple have turned the market on its head and offer something completely different. Purple send you the mattress which consumers buy online from their website. This is then delivered, and consumers can try the mattress for up to 100 days and if they are not happy, they get a full refund, provided it is not damaged etc. This model increases the profitability for the company, because there is no mark up on the mattresses because they do not have to sell through intermediaries or wholesalers. By selling directly to the consumers they can get more direct feedback and increase profits on each mattress sold as there are less people in the supply chain. There is only one person/company involved which is the delivery company of the mattresses. As Slater and Narver (1994) highlight by having competitive advantages and changing the landscape in which firms operate in, allows firms to be more profitable as they have a competitive edge over everyone else within the market. By being open to change and removing barriers to change allows firms such as Purple to be innovative, consequently changing the competitive environment (Reiter-Palmon & Illies, 2004 & Slater and Narver 1994).
The above diagram has shown how much easier and quicker delivery to consumer is vs normal manufacturers. This model has clearly been successful as in 2017 they experienced a growth of over 271 percent in net revenue and gained the leading position in market (CISION 2017). In 2017 it was also reported that they had £187 million in net revenue, not bad for a company that was only two years old at the time (CISION 2017)!
Conclusion
As we have seen Purple’s success has been built upon the sharing economy by raising funds to invest into the brand through sharing sites such as Kickstarter. Furthermore, it has been seen that the leadership has had an effect because it allows people to be creative and come up with very new and innovative technology. Their vision to look beyond the short term has enabled this to happen and change the mattress landscape. However, I believe that the main success has come from their ability to change the distribution channel and make it more profitable than then the normal channel. This is because they have invented a new model which removes so many people which reduces cost and allows them a better connection with consumers.
References
How 2 Brothers Invent The Most Comfortable Mattress Ever – Purple. Retrieved 5 March 2020, from https://purple.com/about-us
JerryRigEverything. (2020). How to Make a Purple Mattress! – Best bed of 2020? [Video]. Retrieved from https://www.youtube.com/watch?v=jH3QvUSs-1U
Learning, G. (2018). Creativity in Leadership [Video]. Retrieved from https://www.youtube.com/watch?v=JIY54dyeFO0
Purple Enjoys Successful 2017 with Rapid Growth and Multiple Award Wins. (2017). Retrieved 5 March 2020, from https://www.prnewswire.com/news-releases/purple-enjoys-successful-2017-with-rapid-growth-and-multiple-award-wins-300546186.html
Purple® Pillow: The World’s First No-Pressure Head Bed. Retrieved 5 March 2020, from https://www.kickstarter.com/projects/227992716/purple-pillow-the-worlds-first-no-pressure-head-be
Reiter-Palmon, R., & Illies, J. (2004). Leadership and creativity: Understanding leadership from a creative problem-solving perspective. The Leadership Quarterly, 15(1), 55-77. doi: 10.1016/j.leaqua.2003.12.005
Slater, S., & Narver, J. (1994). Does Competitive Environment Moderate the Market Orientation-Performance Relationship?. Journal Of Marketing, 58(1), 46-55. doi: 10.1177/002224299405800104
Wang, C., Tsai, H., & Tsai, M. (2014). Linking transformational leadership and employee creativity in the hospitality industry: The influences of creative role identity, creative self-efficacy, and job complexity. Tourism Management, 40, 79-89. doi: 10.1016/j.tourman.2013.05.008
Henry Cornish-Digital Business Models 
Hello！
Thank you so much for your blog shows me the origin of the company and the process of making mattresses. At the same time, you use another video to highlight the importance of creativity in leadership. Then, this blog talks about the point that without an intermediary, the company deals directly with customers and has a certain period of use of the product.
And I am confused with two points.
Firstly, is there any connection between the creativity in Part Two and the digitization of business models?
Secondly, if neither the sharing economy nor new technology is the key to the company’s success, is there a possibility that more text can be used to describe the digitization of the distribution channels that follow? For example, what platforms do customers and companies communicate with, and in what ways are digital innovations reflected?
I’d appreciate it if you could answer. Thank you very much.
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This was the first time I heard about Purple, a fascinating read in combination with the video showing how they are made!
You stressed how they use Kickstarter as part of the sharing economy to raise fund for their products, what do you think is the motivation of people who donated to their Kickstarter was?
Furthermore I think it is important to consider the original matress being replaced, in the circular economy they should be recycled and reused. Do you know if Purple are trying to contribute to the circular economy and the environment in this way, or have plans to?
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Hi Henry!
Intriguing post, thank you for sharing! It’s easy to forget that even mundane items like mattresses have an industry and business plan that supports their sale! It’s equally intriguing that this project was funded on Kickstarter. It shows that customers actively pledged to get the project off the ground. Statista says that only around 37% of projects are successfully funded. Having studied the company, do you think there were any key reasons that helped Purple get funded where other projects fail?
Thanks for sharing!
Statista: https://www.statista.com/statistics/235405/kickstarter-project-funding-success-rate/
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Hi Tom,
Thanks for the comment Toms! Yes its amazing how little do actually get the full funding. I think what helped was what they are adding to the health industry and could help day to day people sleep better with their technology, and the claims were feasible which people bought into.
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