Olejo Turns a Dormroom Hustle into a Growing E-Commerce Business

From the time he started working as a bus boy in his family’s restaurants in upstate New York, Dan Dietz grew up thinking about business.

So it shouldn’t have been a surprise when, as a 20-year-old college student, he watched his friends moving off campus and thought, hey—there might be a way to make some extra cash here.

“I figured, well, I’ll just sell them the furniture instead of them going to Ikea or Wal-Mart or whatever. They know me, they’ll do business with me,” he says.

After securing a couple of contacts in the bedding-supply world, Dietz bought a URL and set up a simple website to hawk beds to college kids. Thus was born dormbeds.com.

And while Dietz apparently had the requisite hustle, his eye for a promising market was not quite honed yet.

“It was the absolute worst. Nobody wanted to buy the products,” he recalls with a smile. “They don’t want to spend a couple hundred bucks on furniture. They’re fine pulling a futon off the side of the road on moving day and just throwing a mattress on it.”

Dietz dove back into his studies and internships. But something about the e-commerce idea wouldn’t leave him alone. The following summer, with those connections in the mattress industry still burning a hole in his address book, Dietz set up a few items on eBay, “just to see what would happen.”

Maybe he’d make a few hundred bucks here or there, Dietz thought—if he was lucky, maybe even enough to avoid more 14-hour shifts stocking the bar at Fenway Park taverns on sweltering game days.

“And it took off, immediately. Within two months in the summer of 2008, I was on about $100,000 top-line run rate for the year,” Dietz recalls. “It was just incredible—just sitting in my apartment, selling three products over and over and over again.”

Dan Dietz

Today, that business has evolved into Olejo.com, a full-fledged standalone retail site that sells beds and related furniture to people all around the U.S. and Canada. Dietz is the CEO, leading a workforce of 18 people, most of whom work in the company’s small office in the Back Bay area of Boston.

The company hasn’t taken on outside investors, preferring so far to grow on its own cash flow. Dietz won’t reveal any detailed financial information for the startup, but says annual revenues are in the seven figures—making Olejo a pretty quiet success story as e-commerce continues to chip away at the generational and technological change shaking old-school retail to its core.

No matter where you live, you’ve seen the commercials for some regional bed-store chain—Sleepy’s in the Northeast, Sleep Country USA in the Northwest, countless other mom-and-pop operations all over the map. Those small, often family-owned retailers are a core part of the national system for selling mattresses and other beds.

It’s a system, Dietz says, defined by confusion for the buyer.

“Simmons, for example, will make a product. They’ll sell the product to Sleepy’s under one name, and Jordan’s Furniture under another name, and us under another name,” he says. “And it’s done so that customers have a hard time doing any sort of cross-shopping.”

That’s why browsing ads for a simple mattress, Dietz says, can seem a lot like shopping for a car, with prices marked up so they can be marked down again: “It’s ‘Queen size, $399, 50 percent off,’” he says. “And we’ve tried to stay away from that.”

One key to Olejo’s business, Dietz says, is actually getting people on the phone. That takes a page from the playbook of Zappos, the customer-service obsessed online shoe store that was gobbled up by Amazon for nearly $1 billion.

Most consumers aren’t totally comfortable with buying a big-dollar item like a mattress—which they’ll be intimately familiar with and keep for a long time—purely over the Internet, Dietz says. That means it’s critical to walk people through all of the features of an item they’re buying as close to in-person as possible.

“Everybody that works here is expected to know how to speak with somebody on the phone,” Dietz says. To either help them with their basic needs or to be able to actually sell the product.”

Another key for Olejo is the logistics system it has built to coordinate shipments behind the scenes. That means sourcing all of the products from the supplier, shipping it in containers or on pallets via freight carrier, and making sure it gets to the buyer over the “last mile” of trucking without damage (and basic shipping is included in the purchase price). Keeping all of that straight really dominates the day-to-day work at Olejo, Dietz says.

“Really, I like to think of us as more a logistics company that happens to be selling mattresses than a mattress company,” he says. “It’s almost that the customer-facing side is the easier of the two halves of the business. And I think that holds true no matter what widget you’re selling.”

That focus on the really unsexy parts of a pretty unsexy business (selling beds) is something Dietz sees as a real strength in an evolving e-commerce world.

The sector has always attracted plenty of interest, from traditional retailers trying to bridge the digital divide to a crowd of upstarts, most recently including “flash sales” or membership sites that use different sales or membership gimmicks to drive revenue and market share.

In the Boston area, fast-growing online home furnishings retailer Wayfair is a bit of a competitor, since it sells beds, bedding, and other home furnishings. (The two sites have come at the market from different angles: Wayfair came from a broad attempt to sell home goods, while Olejo first sprung up on the strength of offering specialty items, including hospital, adjustable, and allergy-free beds.)

I also have to wonder if, like many other e-commerce players, something like Olejo has to worry about the giants at Amazon (NASDAQ: AMZN) taking an interest in its business and squashing out smaller players.

Dietz says that’s not as much of a concern in the mattress game—for one thing, it’s not a particularly glitzy business. But mattresses and beds also aren’t really suited for shipment from carriers like UPS and FedEx, which Amazon relies on to complete its fast shipping network.

Former Shoebuy CEO Scott Savitz, an advisor to Olejo, says the startup fits into a broader theme in the present e-commerce world where retailers focusing on a specific category—particularly if they focus on providing a great customer experience—can build a strong business outside of the everything-to-everyone players.

“By focusing on being the best in your product category, continuing to be very innovative, and staying married to your value proposition with the customer front in center in everything you do, there is still lots of opportunity to build very big businesses outside of Amazon,” he says

Not bad for something that was, not too long ago, just another college kid’s summer hustle.

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