Two failed entrepreneurs, down to their last pennies, stumbled upon a breakthrough in 2015.
Ankit Garg and Chaitanya Ramalingegowda observed a peculiar trend: sleep solution companies were operating with relatively low COGS, yet reporting 8-9% EBITDA profitability. So, where was the margin going?
The answer was simple—middlemen and their hefty commissions.
This insight reignited the entrepreneurial spirit in them. They put in INR 2.5 lakhs each and launched Wakefit in 2016.
The vision was straightforward yet bold: manufacture high-quality mattresses and sell directly to consumers, leveraging a simple yet effective formula:
🔷 cut out middlemen
🔷 improve unit economics
🔷 pocket handsome gross margins
🔷 offer competitive pricing in an already commoditised market
Within a few months, Wakefit began selling orthopaedic memory foam mattresses that were not only 30% cheaper than traditional brands but also delivered straight to the consumer’s doorstep.
The business seems like a goldmine now, but back in the day, funders were a hard sell.
Did you know that 32 investors shut the door on Ankit Garg and Chaitanya Ramalingegowda before anyone even gave Wakefit a second look?
The duo faced rejection after rejection until Sequoia Capital finally saw the potential and invested INR 65 Cr in a Series A round in 2018. That moment was the true turning point.
Fast forward to today, Wakefit is thriving with:
☑️ INR 1017 Cr revenue in FY24
☑️ INR 2500 Cr valuation as of 2022
☑️ 6000+ SKUs
☑️ 2.5 Mn+ customers
What truly fueled Wakefit’s explosive growth? Relentless product innovation.
The Fitting Wake Up Call!
Back in 2016, the concept of D2C was still relatively nascent in India. With no concrete GTM strategy in place, Ankit & Chaitanya focused on the one thing they could control—building a solid product.
The first product Wakefit launched was a premium orthopaedic mattress priced slightly above INR 20,000, which they listed on Amazon. Surprisingly, it sold within a day, even though it had no reviews, no ratings, and minimal visibility on the platform.
So why did a customer drop so much money on an untested product?
The curious Chaitanya reached out to the buyer. Turns out, this customer—a recently relocated NRI in Bengaluru—shared some valuable insights on the Indian consumer mindset.
✔️ Value for Money Matters: Customers are willing to invest in a premium product, as long as they perceive its value. It’s not just about the price—it’s about ensuring they get their money’s worth, especially with a warranty or guarantee.
✔️ The Industry Was Non-Standardised: The mattress industry in India was suffering from a severe lack of consistency, with non-standardised products and confusing pricing models. Customers were tired of dealing with vague claims from local players.
More feedback calls revealed similar insights, leading Chaitanya to build Wakefit’s strategy around consumer mindset rather than the typical product-centric approach. They introduced:
✔️ Risk-Free Trials: The brand began offering 100-night risk-free trials, giving consumers the opportunity to test products without commitment..
✔️ Standardisation: Wakefit promised consistency, offering products that were uniform in quality and pricing across the board. No gimmicks, no surprises.
This customer-centric approach paid off handsomely, helping Wakefit differentiate itself from traditional mattress brands bogged down by confusing and inconsistent offerings.
From Foam Mattresses To AI-Powered Sleeping Solutions
Wakefit’s success lies in its periodic PMF reassessment.
PMF ➡️ Product Expansion ➡️ PMF
Every 18-24 months, the team reevaluates their market positioning and consumer feedback to explore new product categories. This customer feedback loop ensures that Wakefit’s products remain relevant and innovative.
For example, a customer feedback call about stains on mattresses led to the launch of mattress protectors, expanding their offerings from just mattresses to complementary products.
This kind of feedback-driven innovation is what has enabled Wakefit to launch 6000+ SKUs, which now span across sleep accessories, furniture, home decor, and more.
Winning Over Indian Consumers!
Chaitanya has been vocal about the importance of leveraging customer trust once it’s established. As he puts it:
“Once consumer trust is built, you have to keep innovating and expanding your product range. Upsell and cross-sell—this is the only way to improve LTV, while keeping CAC low.”
This philosophy has propelled Wakefit to maintain steady YoY growth and build long-lasting customer relationships.
Innovating The Sleep Experience
Wakefit’s latest launch, the Zense range, introduces India’s first AI-driven sleep solutions, which are both cutting-edge and practical.
The Zense range features two standout products:
🔷 Regul8: A temperature-regulating mattress that allows users to manually adjust the temperature between 15°C and 40°C, with five easy presets—Neutral, Cold, Warm, Ice, and Fire.
🔷 Track8: This sleep tracker provides detailed insights into sleep patterns, enabling users to monitor and improve their sleep quality. Track8’s sophisticated sleep analysis makes it a perfect companion to Regul8, offering an all-in-one sleep solution.
By integrating AI and smart technology into the sleep experience, Wakefit has raised the bar, giving the brand an edge over traditional competitors.
These innovations keep the brand relevant and continuously in tune with what modern consumers need.
The D2C Playbook… Beyond Product Innovation!
Wakefit’s gross profit margin in 2019 stood at an impressive 41.2%, a considerable margin compared to the 15-20% industry average.
✔️ Focus on large ticket size: Chaitanya explained how having a high-value transaction model gives D2C brands room to experiment and scale fast. With larger transaction values, Wakefit takes bold steps in R&D, marketing, and expansion without heavily sacrificing profitability
✔️ Vertical integration: Chaitanya said that the best way for D2C companies to improve their topline and maintain higher margins is by owning their value chain end-to-end. From product R&D to LMD, Wakefit controls it all. This level of ownership allows the brand to streamline its processes and reduce dependency on external vendors
✔️ Minimising return rates: For any D2C business, product returns can be an absolute margin killer. To keep return rates to a bare minimum, Wakefit implemented stringent quality testing procedures. For instance, all their mattresses are vacuum-sealed. This helps reduce damage during shipping, ensuring returns are less than 2%
Wakefit isn’t just dominating the online space—it’s making waves offline as well. The company now operates 80+ outlets across 26 cities, and every single one of them is EBITDA-positive.
The brand reported EBITDA profitability of INR 65 Cr in FY24.
By the end of FY25, Wakefit plans to expand to 120 stores, pushing deeper into Tier 1 and Tier 2 cities to broaden their customer base.
With impressive YoY growth, 2.5 Mn+ customers, and INR 1017 Cr in revenue for FY24, Wakefit has solidified its position as India’s leading sleep solutions provider.
But the question remains—will they be able to maintain this growth rate?
What do you think?
Until the next one!