Pando

Pretty soon millennials will buy everything online; Parachute raises $3.75M to check bedding off the list

By Dennis Keohane , written on June 3, 2015

From The News Desk

At some point in the not too distant future, you may be telling your great-grandkids about the days of hanging out on Friday nights at the mall and picking out fresh pair of Skidz and Guess Jeans from Merry-Go-Round. And they will have not idea what you are talking about.

"You mean, kind of like a whole bunch of pop-up shops, Grandma?"

While e-commerce is nowhere close to this possible future, it is growing rapidly as a percentage of total retail sales. According to Mary Meeker's latest Internet Trends screed, e-commerce now accounts for 9 percent of total retail sales, up from less than 1 percent in 1998.

And while e-commerce is still a high-risk proposition for some investors, one area that is seeing a few more successes than broad, all-encompassing e-commerce sites and daily deal startups is with companies selling niche products to devoted customer bases.

Warby Parker is a classic example of a direct to consumer company that has done so well selling glasses online that it expanded to brick and mortar stores. The online markets these companies are trying to corner are widespread and include Casper for mattresses, Blank Label and Bow & Drape for custom clothing, and Shoes of Prey for custom women's shoes.

A one-year old company that exemplifies what's happening in the niche-commerce space is Parachute, an online bedding and linens retailer which announced today that it has raised $3.75 million in new funding in an investment round led by Upfront Ventures and joined by Daher Capital, Queensbridge Venture Partners, Mesa, and New York VC Joanne Wilson. The Venice, California-based company plans to use the new funding to expand beyond bedding, and soon hopes to offer more products for the bathroom as well as for the outdoors. Also, with its first pop-up shop in Venice Beach, the company has launched its initial foray into brick and mortar retail.

Founder Ariel Kaye said that the idea for Parachute came from her experience shopping for bedding -- an experience she described as "horrible." According to Kaye, the affordable linens were of very low quality, while the more comfortable options were outrageously overpriced.

"I realized that this was a category that hadn't been really liberated by the Internet," said Kaye, who was so fixated on bedding that she would often try to help her friends find the best sheets and linen. "And with my passion for the space, I saw a lot of potential for building a brand."

Kaye said that she started with bedding because sleep is such an important aspect of health and happiness. "I saw an opportunity with luxury bedding basics to build a true brand that puts the consumer first," said Kaye. "That was a very modern product, and that was easy on every style aesthetic."

As she explained, most people look to thread count as an indication of quality.

"That's completely a marketing gimmick," Kaye said. Finding that there was no middle market for a premium quality product as well as no brand loyalty with bedding and linens, she started Parachute to be the trusted brand in the space. A lot of thought went into the actual products, like its Egyptian cotton and Italian made sheets, duvet covers, shams, and down duvets, as well as home decór goods like candles and cashmere throws.

Additionally its products are produced through sustainable means, trying to make as little impact as possible on the environment while promoting a safe work environment. The company also does a one-to-one deal similar to Toms shoes, giving an insect net to the United Nations Foundation's Nothing But Nets campaign for every purchase of its Venice bedding set.

In just a year, the company has hit the one million dollar mark in terms of revenue and partnered with institutions such as hotels, all without doing a great deal of marketing. Much of the success she attributes to companies like Warby Parker and others who have won acceptance from consumers despite opinions that focusing on one or two products wouldn't work for e-commerce.

"With the direct to consumer trend, people are eager, and they understand that you can get a better product and a high-quality product at an acceptable price," Kaye said.

What Kaye is leaving unsaid is that those consumers are largely millennials, who are more tech savvy and far more comfortable buying goods that would have traditionally required a trip to the store. In all sincerity, it says a lot about how strongly younger consumers trust online brands, especially those like Parachute that are making a few great products at an affordable price.

But as consumer habits have always evolved and will continue to do so from generation to generation. And as companies like Warby Parker and Parachute become the new normal, the generation that shops instantly and online may give birth to yet another generation that thinks their parents' "modus shoperandi" is antiquated.

[illustration by Brad Jonas]