You need to know this:

• Koala is a direct-to-consumer Australian mattress company that is now expanding into homeware
• It’s valued north of $150m, and Australia cricket captain, Steve Smith, is reported to have earned more from an early $100k investment than he has from playing cricket
• In a bid to scale, Koala has hired a new global CMO. Peter Sloterdyk is a former Netflix head of original series marketing and Grindr CMO
• Sloterdyk is eyeing diversification. He says Koala will launch 30-50 new products within next 18 months
• Covid-19 permitting, he aims to take those products and the brand global
• Aims to increase brand spending over performance in order to achieve growth
• Says domestic sales are benefitting from current environment and accelerated swing to e-commerce
• But thinks people will “ultimately go back to what is comfortable”.

California streaming

Tasked with taking Koala global, Peter Sloterdyk joined Australian direct–to-consumer company just as Covid-19 hit.

The former Netflix head of original series marketing and Grindr CMO is therefore still in California – and doing a lot of video calls to Sydney at strange times of the day.

But he thinks people now, more than ever, value the simple things in life, such as a good night’s sleep and a comfortable couch. Koala, he says, is just going to keep delivering them – and lots of other household goods direct to its growing customer base.

Sleeper service

Koala started out as a mattress brand, harnessing social media to go direct to consumer and winning rave reviews for its quality, service and sustainable B-Corp ethos. Now it also supplies TV cabinets, linen and sofas - and despite Covid-19, “aims to introduce 30-50 additional products by end of 2021,” according to Sloterdyk.

In fact, he says the coronavirus crisis is actually accelerating growth – and internet-based DTC companies are literally poised to deliver.

“With the shutdowns that are going on globally, but certainly within Australia and Japan, what we're seeing is just a great increase in people spending time online,” says Sloterdyk.

“We're really privileged to be able to take advantage of this crazy time in the world. Our supply chain is intact, our logistics are intact and we're able to continue to deliver to our customers,” he adds.

“So we've seen a really great increase in engagement and excitement with the brand and people being exposed to Koala in a new and different way. We started as a mattress brand, but there's so much more available now. And people are really starting to see that come through today.”

The paradox of choice and the Goldilocks conundrum

Koala will expand “over the next year or so … but only in a very specific way,” with the “same simplistic model,” it has always employed, says Sloterdyk.

Key to that approach is removing the paradox of choice for customers, “the overwhelming amount of decision paralysis that can come … when you are shopping online,” says Sloterdyk.

As anyone who subscribes to his former employer Netflix may appreciate, “if you scroll for hours and hours, you get a little paralysed by all of the choices available in front of you, it gets a little overwhelming, and you end up walking away,” suggests Sloterdyk.

“So from a Koala perspective, we will continue to deliver really, really simple products that are focused on solving that particular issue.”

Limiting factor

While Covid-19 has accelerated e-commerce and potentially changed consumer habits for good, it also brings challenges for challenger brands attempting to scale, says Sloterdyk, especially furniture brands.

“When you're talking about a furniture item or a mattress or even clothing, there is a baseline reticence among customers when they can't touch or feel the product or experience it themselves,” he admits.

While the brand has attempted to address that through four-hour deliveries and four month mattress trials, there is no escaping the “feeling, the touching” aspects, especially within new markets.

Touching and feeling non-essential retail goods is pretty challenging around the world right now. And restrictions may be eased and tightened on a daily basis in just about any country based on infection rates for weeks, months, and possibly years ahead.

So while domestically Covid-19 is unlikely to crimp growth, Sloterdyk accepts his role as global CMO will be somewhat impacted in new markets by health restrictions for the foreseeable future. Especially as the company will need to develop new supply chains and logistics partners within its new markets.

“We are still moving full steam ahead,” he insists. “We’re just having to augment our plans a bit.”

Return of the native

Koala, however, it not averse to change, and has been augmenting its media plans for some time. As with many DTCs, it started life as a digital pureplay, weighting spend about 70:30 in favour of performance versus brand.

Now, as it attempts to scale, it’s flipping the other way.

“When you think about growing a brand globally, or even in your domestic home market, one channel isn't going to do all of the heavy lifting,” says Sloterdyk. “And I think this is a concept that most marketers agree with, but can find it difficult to execute.”

While social and performance marketing “can be really efficient and can deliver great results … we now need to lean in to brand marketing channels, television and out of home, to really round out the full customer experience from a marketing perspective,” says Sloterdyk.

“So if you're just doing social, you're missing all of these other opportunities to engage with your customer. And what I've learned is that the full spectrum is always the most successful.”

The long and short of it

As a result, Koala is now weighting marketing spend around 50:50 brand and performance. Sloterdyk says he might even push that “further into a 60:40 split” in brand’s favour as he aims to deliver the growth he has been hired to achieve.

“For a furniture brand like Koala, the top of the funnel and those brand marketing moments for consideration are really, really crucial to maintaining our customer flow and to continuing the influx of new folks that are experiencing Koala,” says Sloterdyk.

“So right now, we’re about 50:50, and I could see that inching back and forth between 50:50 and 60:40.”

Normal rides again

Around the world, people are talking about the ‘new normal’ as countries emerge slowly and cautiously from full lockdowns. The question is, what changes will stick?

Asked for his opinion, Sloterdyk is sanguine.  He thinks that habits formed during the last few weeks will stick, and that behavioural changes will have some “longer-term ramifications”.

Ultimately, however, he thinks, “everyone has the desire to get back to whatever version of normal is available to us.”

So I think that desire will be powerful – and that may curb any major change in consumer behaviour or sentiment.”

Humans, he says, “are incredibly elastic”.

“Even in a grocery store today, with a mask, some gloves on, it’s pretty easy to feel some sense of normalcy and go back to what is comfortable”.