Sleep Retailer eNews | June 28, 2018

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The Supreme Court Rules In Favor Of Online Sales Tax - Here's What You Need To Know

Judge holding gavel in courtroom

Last week, the Supreme Court finally came to a decision on whether or not online retailers should be required to collect sales taxes in states where they do not have a physical presence. In a landmark 5-4 ruling on the South Dakota v. Wayfair Inc. case, SCOTUS ruled in favor of the state - reversing a 1992 ruling that exempted remote sellers from state sales tax. As a result, South Dakota is now able to require all merchants making more than $100,00 in annual sales or more than 200 transactions in the state to collection 4.5% sales tax. While many brick-and-mortar retailers are counting this as a major win, the impact of this ruling may be less significant than many hope.

Online retailers have not been required to charge sales tax, thanks to Quill Corporation v. North Dakota: a 1992 Supreme Court decision which ruled that the Constitution “bars states from requiring businesses to collect sales tax unless they have a substantial connection to the state.”

Of course, the retail landscape of 2018 looks very different than it did in 1992. In fact, this decision was made two years before the first recorded internet sale was made in 1994 - and was instead focused on mail-order retailers. As ecommerce began to emerge as a viable selling option in the mid-90s, this ruling gave the burgeoning market a needed leg up.

With the growth of online retail, the Quill decision not only caused states to lose billions of dollars in annual tax revenues - it also put local businesses at a major disadvantage, especially those in rural areas. By eliminating sales tax, online retailers were able to offer consumers lower prices than their brick-and-mortar counterparts. Some studies have estimated that the sales tax exemption has afforded major ecommerce players a price differential advantage of nearly 11% over traditional retailers.

In some ways, this has helped contribute to the meteoric rise of online retail. Last year, ecommerce sales hit $454 billion — surging to nearly 9% of total US retail sales. Amazon alone generated $119 billion in revenue from product sales in 2017. And with online sales growing at four times the rate of brick-and-mortar retail, this number was expected to grow even larger in the coming years.

As the market has shifted, online retailers should no longer qualify for “an arbitrary advantage over their competitors who collect state sales taxes,” wrote Justice Anthony Kennedy in his majority opinion. “The internet’s prevalence and power have changed the dynamics of the national economy.”

In today’s increasingly polarizing political climate, it’s interesting to note that South Dakota’s appeal drew bipartisan support. As experts anticipated the outcome of this case, several states have already passed laws similar to South Dakota’s - hoping to take advantage of this decision as well. Across the country, brick-and-mortar retailers are championing this ruling as a win for the little guy. More than that, they see it as an opportunity to level the playing field between them and their ecommerce competition as it could ultimately mean higher price tags for online purchases.

“Retailers have been waiting for this day for more than two decades,” National Retail Federation president and CEO Matthew Shay said in a statement Thursday. “The retail industry is changing, and the Supreme Court has acted correctly in recognizing that it’s time for outdated sales tax policies to change as well. This ruling clears the way for a fair and level playing field where all retailers compete under the same sales tax rules, whether they sell merchandise online, in-store or both.”

But the impact of this case might not be as meaningful as some retailers hope. Thanks to their sheer size and scope, companies like Wayfair, Overstock and Amazon may not weather any serious impact on their bottom lines as a result of this change. Especially considering Wayfair and Amazon already do collect taxes on at least a portion of their overall sales (Wayfair collects it on approximately 80% of its US orders, while Amazon collects it for its primary sales in 45 states).

The final decision also left certain factors open and undefined, which could cause legal challenges in the future. Justice Kennedy acknowledged the possibility that some transactions were so small that no taxes should be collected. Additionally, this particular ruling did not consider whether or not states can retroactively seek sales taxes from online retailers.

At the same time, this decision may have a more significant effect on small and medium-sized online start-ups. “Today, the U.S. Supreme Court has reshaped the interstate commerce landscape in a move that could impact small business innovation on the internet, which has been a driving force behind our nation’s economy for the last 15 years,” said Jonathan E. Johnson III, a member of Overstock.com’s board.

As the traditional mattress retail industry has faced growing competition from many smaller online-only brands, this could have a more meaningful impact on the bedding marketplace. But more than promoting immediate change, this decision mainly serves as a meaningful acknowledgement from the Supreme Court that the retail landscape has changed significantly over the past 25 years. Any changes to shopping behavior will ultimately be the result of how both online and brick-and-mortar retailers respond to this ruling.

“Any way you slice it, do not expect consumer behavior to change overnight,” writes Corey Tollefson, senior vice president and general manager for retail at Info, in Entrepreneur. “The modern consumer is addicted to online shopping. Adding sales tax to the price will not impact that immediately, but retailers of all kinds will need to invest in diversifying their sales channels to provide cohesive experiences online, in-store and everywhere in between.”

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Case Study: What Lululemon Can Teach Us About Successful Email Marketing

millennial email marketing

While there are many different ways for retailers to engage with consumers, email marketing continues to be one of the most effective. But in order to make the most out of this channel, it’s important to understand certain best practices. To get a clearer picture of what works and what doesn’t when it comes to email marketing, we’ve taken a closer look at one company that's really knocking it out of the park: Lululemon. Though it may be an activewear brand, there is so much retailers across all product categories can learn from Lululemon’s results-driven approach to email marketing. By optimizing its emails in accordance with consumer trends, the company successfully increased its open rates to 38.5% last year.

Why Market Via Email At All?

To start, let’s take a step back and examine why marketers should still care about reaching customers by email in the first place. Although marketers now have numerous avenues through which to connect with potential customers, develop brand awareness and prompt purchasing decisions, email marketing remains one of the most powerful ways to engage consumers. Though social media seems to be all the rage, it doesn’t reach everyone. These days, email has become a communication staple for consumers of all ages.

While it’s important for retailers to share clear and precise messaging through a variety of channels (including both email and social media), studies show that email marketing is still directly tied to revenue generation.

According to the Direct Marketing Association, “segmented and targeted emails generate 58% of all revenue.” Although email marketing is still alive and well, there is a specificity to how and what kinds of emails actually lead to revenue generation - and these best practices continue to evolve. Lululemon is succeeding, in part, because it’s keeping up with the trends and being realistic about consumer buying behaviors.

What Lululemon Does

  1. Keeps it short and snappy

In order to achieve the 38.5% open rate on marketing emails reported in 2017 by Gartner L2, Lululemon ensured that the majority of its email subject lines (86%) were 30 characters or less. With succinct subject lines like, “We’ve reimagined a favorite,” the emails begged to be opened. What’s interesting about this simple change is that, while it is known that the sweet spot for subject line length is between 21-30 characters, only 26% of subject lines in Gartner L2’s mobile marketing report actually measured 30 characters and under.

  1. Meets consumers where they live: on their phones

Though most purchasing conversions still occur via desktop, the number of mobile opens continues to rise, with Litmus reporting in 2017 that 60% of emails are opened on a mobile device. In order to garner higher mobile engagement and conversion, Lululemon optimized 93% of its emails for mobile by using striking hero images (the top banner portion of the email design) and keeping the most meaningful copy above the fold. That means that recipients don’t even have to scroll in order to get the gist of each email’s message. In order to spur more engagement, the mobile friendly emails also included an uncluttered footer template with prominent buttons and clickable options.

What You Can Do

If you’re looking to increase your email marketing open rates, a great first step is to survey what’s been working for your brand. Which emails receive the most open rates? Pull a list of your top 10 marketing emails that have received the most opens, then see what they have in common. From there, try implementing one to two of the characteristics emails with high open rates have in common within your new marketing emails.

The other approach is to study other brands that seem to be doing it right and implement the tactics that work for them. For Lululemon, this includes: more mobile friendly templates; shorter, punchier subject lines; headers touting appealing images; and clear copy with distinctive calls to action.

Of course, it is important to adjust the style of the email to your specific product and industry. Make sure to keep any data you’ve collected on your customers in mind when making decisions for a marketing campaign. Understanding your audience and their interests will always make a marketing campaign stronger.

Additional Email Marketing Best Practices:

  • Take a good, hard look at your email list: Did you buy your prospect list or did you use an opt-in form to generate it? People who subscribe to receive email from a company are more likely to actually open them. Though having a bigger mailing list may seem valuable, your emails will be more effective if they’re reaching people who are genuinely interested in what you’re selling.
  • Segment: By sending specific messages to specific groups, you are able to craft copy that is more relevant to their interests. Use buying patterns, location and age as data points to help you create segments within your list. People like emails that speak directly to their preferences.
  • A/B Test: As you start developing shorter and snappier subject lines, use the A/B test function to see which ones lead to increased open rates. Most email marketing platforms offer this function, which allows you to compare the success rate of emails with different variables. By focusing on just one element of the email per test (i.e. keep the body of the email the same, but try out two different subject lines), you can come to more exact conclusions of what works and what doesn’t.
  • Simple Visuals: What you’ll notice about the successful Lululemon emails is that they are clean and uncluttered. They use simple but compelling product images and limited copy to convey a straightforward message that is easy to absorb. Feature the best shot of your top sleep product and support it with copy that is simple but relevant and actionable. i.e.: Sleeping hot this summer? Our advanced temperature-regulating mattress will cool you down.

Read more here, here and here.


7 Reasons You May Be Sleeping Hot & Tips For How To Cool Off

sleeping hot

by Amy Dimond, Director, Brand Communications, Brooklyn Bedding

Restorative sleep is crucial to living a healthy, happy and productive life. Nearly all of us experience sleep deprivation at some point, but one of the top culprits—sleeping too hot—is totally fixable. Here are 7 specific reasons you might be experiencing night sweats and what to do about them.

Your exercise routine.

Along with increasing your heart health and core body strength, exercise is one of the best ways to boost your metabolism. However, sudden changes to your exercise routine—or even the intensity of your workouts—can cause your thyroid to release more hormones in support of more activity. Both the increase in metabolism and the shift in hormones can lead to night sweats.

Tip: To reduce these unwanted side effects, ease slowly into any new exercise regimen and to try exercising earlier in the day.

You have a higher metabolism.

We’re mostly looking at you, men. That’s because a men’s metabolism, on average, is 23% higher than that of women. Metabolism is measured by the rate at which you burn food to fuel your body. The very process of fueling your body with energy causes your temperature to rise. Naturally, a higher metabolic rate will coincide with a higher body temperature.

Tip: One surefire way to ensure a good night’s sleep is to invest in a mattress with cooling technology, particularly an advanced cooling mattress that moderates your skin temperature to an ideal 88 degrees Fahrenheit.

You’re losing the thermostat war with your partner.

Even though men have a higher metabolism than women, women generally have a higher core body temperature. That may seem counterintuitive, as women are far more likely to feel cold sooner. The fact is, because women are accustomed to feeling that warmer internal temperature, they will nearly always be more sensitive to external cold. Women are also ultra-efficient when it comes to conserving energy. Females pull heat to their vital organs first—one of the reasons why women’s hands and feet tend to be three degrees colder than men. These physiological differences account for some intense thermostat wars!

Tip: One of the best ways to ensure both of you are comfortable is to invest in the right pillows—choosing different materials for your individual sleep needs. Latex pillows are naturally breathable while cooling gel pillows provide relief at the neck, one of the most influential areas for lowering or raising body temperature.

Your hormone levels are fluctuating.

Any changes in reproductive hormones can impact the hypothalamus—your body’s internal thermostat—resulting in changes in body temperature. While approximately 75 percent of women who experience menopause also experience hot flashes, women of all ages can be subject to this type of hormonal flux.

Tip: You can ease night sweats related to hormonal fluctuations by sleeping with fewer covers and using sheets that are inherently breathable and cooler to the touch. Sheets derived from cotton and bamboo are among the best choices. Bamboo sheets are particularly known for their softness and lightweight hand. Turning on a standing fan or ceiling fan for localized cooling can also bring immediate relief.

You live in the sun belt (or it’s summer).

Living in the southern third of the United States can make you the envy of the rest of the nation in January, but triple digit temperatures or high humidity in the summer months can leave you feeling hot and sticky 24/7. Even if you live in a cooler climate, summer months require some extra measures to beat the heat. Not everyone in hot climate areas can afford to adjust the thermostat to the optimal temperature for every hour of the day. (Perhaps that’s why Phoenix, Arizona-based Brooklyn Bedding developed advanced cooling technology for mattresses in the first place.)

Tip: Beyond the bed, anyone looking for a chill sleep environment should close or pull down all window treatments during daytime hours and keep the thermostat about three degrees higher than comfortable when away from the home. Turn down the thermostat when you return and at least a few hours before going to sleep—this technique will not only cool down the house, but also save on utilities without overworking your AC unit.

You don’t sleep alone.

Allowing children or pets to sleep in your bed is a hot topic of debate—with a rise in temperature being one of the more literal side effects. If none of you are ready to give up the emotional security, then cooling technology is the next thing you should add to the mix.

Tip: Surface cooling infusions are now available in a number of mattresses (including the advanced cooling Brooklyn Aurora). Look for cooling infusions that react to and help moderate your body temperature, as well as foam treatments that draw heat out and away from your body.

You sleep on an all-foam bed that lacks cooling or breathability.

The invention of the bed-in-a-box has helped popularize the all-foam mattress. While there is a lot to like about all-foam beds, one of the chief complaints is the way some models absorb and trap heat. If you’re in the market for a mattress, there are a few ways to ensure a more comfortable, cooler night’s slumber.

Tip: First, look for foam mattresses featuring open cell technology, breathable smooth tops and foams with cooling properties, including cooling surface infusions. Second, understand the difference between all-foam beds and hybrid beds. Hybrid beds feature coils instead of high density base foams. Hybrid mattresses with individually pocketed coils provide not only added comfort and support but also greater airflow, allowing heat to dissipate while you sleep. Regardless of the mattress you sleep on, the proper foundation—including an adjustable base, which also allows great air circulation—is ideal for chilling.

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