E-commerce | Is IKEA selling online? !

IKEA finally started to do e-commerce in China.

At the IKEA Press Conference for the fiscal year 2017 on August 16th, this news received the most attention. Because many years ago, IKEA was the firmest retailer supporting the offline sales model. “You can buy and sell on the webpage, but it will reduce the number of customers who come to the store, and you will lose some extra business.” In 2008, IKEA founder Ingvar Kamprad dismissed the proposal of operating e-commerce.

At the beginning of 2014, Peter Agnefjall, the new CEO of IKEA, set the goal of “up to 5 billion euros in online sales by 2020”, but he still hesitated about the e-commerce business. “Most of IKEA’s sales to date, It should still be done by our offline store."

This cautious approach to online business and the ongoing expansion of the number of physical stores online have formed a strong contrast. “The problem of why IKEA does not do e-commerce” has been raised more and more frequently. The explanations provided by IKEA are varied, but the conclusion is probably: In the face of increasing sales, the existence of e-commerce is dispensable.

One year later, Peter Agnefjall completely retired. In an interview with the New York Times, he said: "We are not the earliest adaptors of the Internet, but we have already wanted to be mature. We understand that this is not a trend but a dramatic change."

Ireland, the Czech Republic, Australia... More countries have joined the e-commerce business pilot, and China has also begun to implement the command of the headquarters. Even though it is the fastest growing market, it is actually part of this large plan.

In the past few years, when Zhu Changlai, president of IKEA China Retail, was asked, “when the online shopping business goes online at home”, the answers given are similar to the promise of “online service planning and IKEA global synchronization”. And the "as soon as possible" expectations.

At the press conference, her introduction to this pilot was simple and vague. All known information is limited to: The water purchase business will be tested at the end of August, and the operation and distribution are limited to the Shanghai area; the pilot data is expected to be extended to more cities in China after feedback analysis. You can still see IKEA's caution in this matter. After the press conference, IKEA's annual meeting for internal employees, "Transformation" became a topic that was mentioned many times, and e-commerce business was considered as one of the contents. In conjunction with the contents of this conference, we integrated some relevant information and proposed 10 questions. Trying to answer IKEA's e-commerce, in the end will be what kind of e-commerce.

Why is IKEA now doing e-commerce in China?

In the previous discussion, we have already answered the part of this question that is closely related to the time: As part of a multinational group, IKEA China's business is highly dependent on the unified command of the Swedish headquarters; this is the promotion of the e-commerce business. In the past, they may have maintained similar preparation speeds with other markets, but there is no priority in the actual line operations.

Moreover, if IKEA still adheres to the idea that “under-sales growth is fast enough, there is less need to develop e-commerce”, then the Chinese market, which looks far from saturated, does not really need e-commerce to help improve performance. .

In the fiscal year ending in August this year, more than 80 million consumers bought more than 11.7 billion yuan from 20 IKEA stores across China, and their sales increased by 19.4% year-on-year. In the previous fiscal year, this growth rate was 18%.

However, the continuous increase in sales and customer traffic does not mean that IKEA has no trouble in China. A simple calculation will reveal that IKEA did not make more money from each consumer: In the two last fiscal years, the unit price of IKEA China remained at around RMB 140.

For a company that sells furniture, home products and various foods at the same time, this figure is obviously low. Taking into account the Chinese consumer's love of IKEA restaurants, this figure may further shrink.

What kind of experience is online shopping IKEA?

In an interview, IKEA China gave a slightly more detailed explanation of this matter:

At that time, if you want to buy IKEA online, you still need to select products on the official website. Logistics and distribution also rely on existing suppliers; the products you sell are taken from your nearest physical warehouse. , Online and offline prices are the same; nor will it be possible to expand the sales of goods on the Internet or to accelerate the speed of new ones because of the e-commerce business.

The same website, the same goods, the same price and delivery system should satisfy the "consistency" that IKEA emphasizes for consumer experience.

Before the online purchase of IKEA, Zhu Changlai once said: "Everyone is trying to figure out how to achieve consistent online and offline, consistent customer experience, including consistency between stores and stores, products and services. ... Chinese consumers expect more from it than from other countries."

IKEA finally realized that the enthusiasm of Chinese consumers buying online furniture is so high?

At the end of 2015, “Curiosity Daily” observed China’s furniture market, we found that the industry did not stop to wait for IKEA.
Those "basic" furniture that are cost-effective have already sold well on e-commerce platforms such as Taobao. Those brands who are pursuing design and quality are wondering how they can use the Internet based on the consumer education that IKEA has already completed. Do something more value-added business.

At Taobao, China’s largest e-commerce website, since 2014, home improvement home products have been the best-selling category on the platform besides clothing. At present, this category has been able to solve the most critical distribution and installation problems of furniture e-commerce, and there is also a relatively independent sales platform "extremely home" that provides nearly 700,000 kinds of goods.

However, in the official statistics, the market size of the entire construction and home improvement industry exceeds 4 trillion yuan, of which the furniture segment exceeds 700 billion yuan, and the penetration rate of the Internet is only 3%. Those who dare to buy furniture directly on the Internet are not necessarily just to solve the problem of cost-effectiveness, but to pursue a better product quality and shopping experience.

This reflects IKEA's hesitation to some extent. In April this year, when “Curius Daily” confirmed the launch of online shopping services in the second half of the year, IKEA China stated that their headquarters in Sweden had finally realized that “the number of Internet users in China and how much consumers need”.
However, from the data point of view, these passionate Internet users are currently the most cherished category is not furniture.

IKEA has many stores in the Yangtze River Delta. Why did the pilot only do it in Shanghai?

Looking at the distribution of IKEA stores in China, this is also a puzzling question:

In the Yangtze River Delta region, IKEA has a total of 8 malls, of which 3 are located in Shanghai. IKEA China stated that choosing Shanghai as a pilot city is taking into account the maturity of the market. “The base is larger and the resources are more”: In addition to 3 large-scale shopping malls, there are 2 IKEA logistics centers. , 1 distribution center, 10,000 employees, and headquarters of IKEA China.

But around Shanghai, IKEA's coverage of cities such as Wuxi, Suzhou and Ningbo is also good; this year in Wenzhou, IKEA also opened the first "order center" in China, hoping to deal with the "model + order center" model. Local consumers' growing shopping needs.

Unlike the traditional IKEA store, which requires land purchase and construction, the ordering center rents space from existing shopping malls. The mature business district in the downtown area can increase contact with consumers, and the cost and time to open stores are greatly reduced. At the same time with the purchase and pick up features.

IKEA hopes to further increase IKEA’s profitability through this new retail channel – although compared to the traditional furniture stores like Redstar Macalon, IKEA, which is based on a large 3-50,000-square-meter store, is already completely regarded as “ Small profits but quick turnover."

In view of this, IKEA piloted e-commerce in Shanghai first, which probably reflected the steady and conservative nature of the Swedish company.

Uncertainty also certainly exists. IKEA China stated that the current team responsible for e-commerce is still very small. It may be necessary to gradually resolve those difficulties that were initially underestimated by piloting in the Shanghai market for a period of time. These difficulties may include the number of orders that the logistics team can load, the after-sale service capabilities, and the shopping experience on the official website.

What will IKEA sell online?

IKEA is famous for its high cost performance and easy to transport flat-panel packaging furniture. Its logistics system is mainly prepared for these large furniture.

This time, e-commerce pilot sales of goods will also include most of the offline store's existing categories (which are currently excluded from the online sale include green plants, IKEA food, as well as customized curtains, carpets, etc. ).
However, from the perspective of various types of "IKEA purchasing" on Taobao, after opening e-commerce business, it may still be the smallest market for those small items -

In the IKEA Shopping Taobao shop, which sells the most, the top three best-selling products this month are the 108 yuan children's chair, the 39 yuan square table, and a cup of 2.9 yuan.

After studying all the items listed on its official website, Curiosity Daily found that large items such as beds, tables, chairs, cabinets, or washbasins still lack the total number of items such as mirrors and hooks. .

Will IKEA go to Tmall or Jingdong to open a flagship store?

In an interview with Curiosity Daily, IKEA China stated that they are "very interested" in e-commerce platforms such as Tmall, "but there are currently no plans to cooperate with other third-party platforms."

In other markets where e-commerce business has been opened worldwide, IKEA has never worked with any other e-commerce site. They just added a “shopping cart” icon to the official website that already has all the products and prices, and paid and arranged half of the functions of logistics and distribution.

Therefore, the feeling of buying IKEA products online will be more like buying a mobile phone on Apple's official website (just when IKEA's new products are released, it should not attract huge traffic like the new iPhone).

After Jobs returned to Apple in 1997, he revised the company's official website and launched an e-commerce function. By the end of 2011, this site became the second-largest online retailer after the Amazon in the United States and could contribute more than 10% of sales to Apple.

In the Chinese market, IKEA also has some more localized attempts - such as a WeChat account. In FY2015, the public number set up in less than two years attracted more than 3 million subscribers; a weekly special discount item will only be known through the WeChat public number push.

Imagine: When there is no e-commerce, consumers can only buy after seeing the push and go offline at the IKEA physical store, after which the process will become smoother.

If you just buy a small item, will IKEA pack it? Can you serve it on the same day?

As we have said before, IKEA’s e-commerce business is not as “e-commerce” as you think. Therefore, it is unlikely that such experiences as mailing and delivery on the same day will be realized in this pilot project.

At the current online store, IKEA provides two services to the store: home delivery and home delivery. The cost of self-promotion is low, and it is fixed at 60 yuan per order. Delivery to the home must be based on the quantity of the goods and the distance of transportation. The minimum is 59 yuan. When buying a large number of large items, such a billing method may appear cost-effective, IKEA can also use this method to sell more goods to consumers. However, as mentioned earlier, IKEA’s current best-selling products are still small homes. This will be a contradiction between IKEA's vision and consumer demand.

As for the logistics part, IKEA China stated that on the one hand, they will rely on existing suppliers (that is, those logistics companies that are good at transporting large commodities). On the other hand, they will actively cooperate with third-party agencies to open up the “last mile”. "The problem. Therefore, this may mean that the delivery of small items will be slightly faster.

In addition, IKEA seems to have forgotten its huge membership system. Amazon, which used to be a "user" concept, made use of the package and faster delivery experience to make Prime members a profitable project, but IKEA did not.
Detail maps, buyers show, comments area... What standard will these e-commerce vendors sell?

Similar to the previous question, from the perspective of IKEA's e-commerce business trials in other countries' markets, more clear pictures, an open commentary area, and a variety of actual buyers' shows will not be possible - because This involves a more complex transformation of the company's official website.

If there is anything that can be roughly complemented by a buyer's show, it's probably the same model that IKEA has online and the product catalog that can be viewed online. They are also keen to "first allow consumers to experience in the mall below the IKEA line, and then go online" approach.

As an independent e-commerce, how much can IKEA do this business?

In the past year, China has had more than 67 million visits to this website without shopping functions. It is difficult to say how much their consumer enthusiasm will be stimulated after the Chinese market has fully opened online shopping.

A reference example is IKEA's largest overseas market, Germany. In FY 2013, IKEA Germany's online sales reached 92 million euros. Although it only accounts for 2% of overall sales, it has achieved a growth rate of 27% year-on-year – which means it attracts more consumers' attention.

For the whole IKEA sector, the current e-commerce business has not been so driven by sales: According to the statement made by CEO Peter Agnefjaell at the end of 2015, online sales contributed more than 1 billion euros to the company in FY2015, but It is only 3% of total sales. He hopes that this ratio will rise to 10% in 2020, 5 billion euros.

With e-commerce, isn't IKEA going to open so many stores or going to a small city?

IKEA has always stressed that they will not slow down the physical store expansion in China and global markets. In the upcoming 2017 fiscal year, there will still be three new stores in China.

With the opening of the order center in Wenzhou, the IKEA brand in China may also become more expensive. More and more such small-scale, flexible stores will appear around the area where IKEA already has large stores.

Compared to the e-commerce business's landing and further promotion, it will be possible to open 34 stores in China as planned in 2020. This may be the more urgent issue for IKEA China.

Cartography: Wu Lingxian

Source: Curiosity Daily

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