The entrepreneur describes his journey from setting up OTTY Sleep on a shoestring, compared to rivals, from marketing the product online to selling his product at one of Britain’s retailers.
What is the business, when was it started and what were you doing beforehand?
OTTY Sleep is a bed-in-a-box mattress retailer based in Leeds which launched in 2016 with a mission to become the world’s leading sleep brand. We have worked to create a unique and innovative “one-size fits all” product that is designed to bring the best night’s sleep to the UK.
Before OTTY, I had another business building a brand of mobile phone accessories – a venture that was hugely successful, and one that amplified as I secured contracts with a number of leading car manufacturers. Ultimately, the role gave me experience in marketing, e-commerce, logistics and management, all of which have aided me in my current role at OTTY.
How did you get the idea, and what opportunity did you see when you started the business? What are your sales and what do you expect the turnover potential to be?
As a young entrepreneur and keen athlete, I understand the importance a good night’s sleep has on both physical and mental wellbeing, and in 2015, I went on the search for a mattress to give me the optimum rest to match my busy lifestyle.
Unfortunately, I was met with false marketing promises and high prices, and decided the industry needed bringing into the 21st century, which led to the creation of OTTY.
The team and I set a number of USPs – all of which were created to counter my own negative experiences in the sector. Our key selling point was to offer an innovative, good night’s sleep to the masses at a cost that didn’t break the bank, and worked closely with a number of leading mattress manufacturers to combine tried-and-tested methods with innovative technologies, all of which costs up to £150 less than our competitors.
It’s safe to say that the company has been well received since the launch, with a first year turnover of £1.7 million. This has substantially increased in 2018, with an estimated turnover of £8-10 million – a circa 500 per cent increase – which proves there’s an increasing consumer confidence in our products.
Our range has also been positively recognised by industry experts, and has won a number of prestigious awards, including a Which? Best Buy Award in January 2018, again proving the mattress’s quality.
How did you finance it and what were the challenges of that?
I was lucky enough to be able to use savings from my previous ventures to launch OTTY.
I had very close relationships with the supplier, and we were fortunate enough to have been profitable during our start-up period. Ultimately, this gave us the opportunity to build up some capital and allowed OTTY to quickly support itself.
What were your key marketing strategies?
As an online retailer in a saturated market, we knew had to rock the boat a little in order to achieve our goals. OTTY was launched on a shoestring budget, while the “main players” were heavily funded by large VCs and corporate finance houses and had capital that hugely outweighed ours. One particular competitor launched with £75 million available capital – a figure that dwarfed our £1.5 million – so we had to make the most of what we had available.
We’ve become specialists in intercepting the customer journey, with many impressed with our USPs, our innovative and high-quality product and our lower price point. Our disruption of the market has led to plenty of customers comparing us to our competitors through social media and review channels, something we’re hugely proud of considering our modest budget.
What are the revenue streams?
We sell the majority of our goods online, and all marketing and advertising activity links back to the website. This gives us to chance to capture the customer’s attention with content to explain our brand ideology, present the products, and give them the opportunity to speak directly to our team through an online chat service.
The online chat platform allows us to answer any questions the increasingly-savvy customer may have, which helps to further develop their knowledge of the market. I’d estimate that around 50 per cent of the people we speak to through the chat eventually purchase one of our products. For those who have visited our website but not yet committed to a purchase, we’ve implemented a number of re-targeting tactics to make sure they are aware of any offers we have on at any particular time.
More recently, we’ve been working on bringing OTTY to the retailers, and are currently selling in Next Home – one of UK’s most influential furniture retailers. This activity has also led to an increased presence in the furniture trade media, which lets us provide retailers with knowledge on the OTTY brand.
What are the main challenges you have experienced and seen?
When we first launched OTTY, we were aware the market was becoming quickly saturated, but were confident our product and its USPs would be well-received and the mattress was what was needed to change the industry for the better.
I was also confident that if we had the right people in place, we’d be able to make a mark on the sector, and recognised how crucial it was to get the correct staff in place. As a fast-growing start up, we needed employees who were on the same wavelength, and I knew that if we found people who were as passionate as I am, then everything else would fall in place, which so far it has!
What advice would you give to early-stage businesses looking to disrupt markets?
If you truly want to disrupt a market, you need to be passionate about what you’re business and get a full understanding of the industry before beginning.
My advice would be to know your market, know your customer and know your numbers. If you know what type of person would buy your product, what they’re prepared to pay and how to reach them, you’re onto a winner!
Michal Szlas is the CEO and founder of OTTY Sleep