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Success Story of IKEA : From Offline to Online Business

IKEA Success Story

Offline to the online business concept cannot be separated from the fast pace of information technology development. In America itself, many retail stores and other offline store become collapsed because cannot defend their business from the online strategy attack. Learning from this point of view, IKEA as one of leading manufacturer company from Swedia decide to develop their strategy using the online technology. It will be sad if one of the biggest manufacturers of retail like IKEA will get collapsed just simply because of the inability of following the worldwide trend change.

Ingvar Kampard as the founder of IKEA keeps doing amazing innovation to support the business. Such innovation that combines offline retail and online strategy marketing make IKEA getting bigger than before. At the end of 2017 itself, this company already has 411 retail stores worldwide with 194.000 of the employee. You may not believe that IKEA was just like some common small grocery where you can find a simple product such as pen, socks, wallet,and others. Entrepreneurship skill that owned by the owner is the secret key to success since he starts his own business at 7 years old of age.

IKEA success concept

Start selling random things

Kamvardstarts selling many things randomly. This product is a simple daily need so that he can keep making income. Starting to be an entrepreneurat a very young of age around 7 makes Kamvard experience valuable life experience. Automatically, his entrepreneurship skill will be expert through the time.

Breakout idea on IKEA product that involving customer

The idea of assembled furniture coming from one of the IKEA employees. This brilliant idea comes up from the simple idea of cutting off the table leg to create easier delivery. Believe it or not, it can decrease the transportation and storage cost. Next, the flatpacking method is the following. This method makes customer but the furniture in a single piece. Automatically, the customer will be able to design their own desired interior.

The idea of involving the customer is a brilliant one. Instead of just produce and finding a way to make the customer buy the product, IKEA chooses to create a different way of shopping. Customer will be involved more in the design process. The accessibility and simplicity of uniquely personalized design of the product is an undeniable factor of IKEA success in its competition with various other furniture retail store and online store such as Amazon.

However, the idea of involving customer on design and assembling the furniture is not always creating success. For example, in Japan IKEA failed to get the successful expansion. It is simply because this company cannot read well about the customer characteristic in Japan society. Even though their concept is great but the reality shows that Japanese people tend to choose already assembled furniture. They do not waste their time or get busy assembling their own furniture. That is why some case study and deep research need to be done carefully to get closely related tothe certainsocial condition of destined expansion.

Affordable price for the customer

Good quality and innovative product usually only being able to reach by a certain customer. This concept is denied by Kamvard himself as the founder and owner of IKEA. He wants more people using his product. Based on this purpose, IKEA always trying to develop an economic product. However, some customer unsatisfactory experience still found relating with the delivery process. IKEA Indonesia, for example,has a stiff regulation on delivery timing so that customer cannot negotiate the date and hour for delivery process. It will be better if IKEA can make a more flexibility in their regulation regarding this matter so that customer especially the busy one can find a great time to accept the package.

Enriched with an emotional touch

One success key is making customer get close and easily remindof the product. IKEA adding emotional touch by labeling their product with human name, bird, fruit, island name and etc instead of just number or code.

Bringing IKEA concept into the reality of life

IKEA bring their concept into reality through the product simplicity, affordable and high quality. Today, we can reach IKEA product simply by accessing the IKEA site, online catalog,and application. To get closer with the customer around the world, IKEA following the fast pace of internet technology to defend themselves from several rivals such as Amazon, Flipkart, Home24 and Germany’s Otto.

To make it true, IKEA planning to invest around 3.1 billion euros in 2018 and 2020 to expand their marketing technology in digital service and eCommerce warehouse development. The invest rate hopefully can increase sales by up to 20 percent in 2020. It is a real challenge for IKEA which needs to face Amazon as one of the biggest online stores with various brand joining inside. However, IKEA keeps continuing their development to keep competing with their rival.

Offline to online business IKEA, Innovation changes

Creating innovative banner

Most of you may think that there will be maximum 5 product that can be applied a single banner box. IKEA breakout this concept successfully through their innovative website banner. They have more than 2800 product on their 300 x 251-pixel website banner. They claim that it is their way to communicate the message of their caring and ability to provide favorite furniture no matter size of the area that the customerhas.

Augmented reality addition in IKEA catalog

Nowadays, the IKEA catalog is completed with augmented reality. Augmented reality itself is a kind of technology that creating a computer-generated image in user view of the real world. Finally, this technology will provide the customer with a composite view. The technology is already being able to reach by visiting the site of installing some application. For customer point of view, I think that this will be helpful for a customer that get used to only seeing the product catalog and imagine how it would be into absolutely seeing it in a composite view.

Room design with VR technology

VR technology or virtual reality usually used by entertainment and game content. However, IKEA bravely doing innovation to use virtual reality technology in designing their room. The customer can be simply accessing the technology of virtual reality and try to design their own personal creation and freely change it as they want. This personalization innovation reach massive interest of customer since it makes them easily creates as they want. IKEA itself gaining a lot of benefit from this technology such as being closer to customer need and gaining a more loyal customer.

In fact, any other company may create a various product with competitive price as IKEA but not all of them can provide an understanding like IKEA does. Using VR technology is surely beyond selling and marketing strategy but it is more about the please customer. By letting customer doing some trial on finding the perfect design and product on their own, it will enhance customer satisfaction and IKEA selling as well. How is it possible? In conventional manufacture selling strategy, the customer may only ask about what they need and then advice to choose among certain product based on manufacturer point of view.

The concept of VR makes the customer feel free to make their own design and find the proper product for their need. Automatically, it will enhance the possibility of exploration on another type of IKEA products. It is similar with cut the cost of promotion of every product that they have since customer itself will feel curious and ended happily to search by their own among a lot of product series to find the one that matched with their style or needs.

Environmentally friendly product

IKEA already commit about the environment. Their commitment showed in every single product that they have. One of the prove is showed is ISTAD, RYET, ALMAREN and LAGAN product collection.

-istad is a multipurpose plastic bag that produces as the solution of finding the environmentally friendly plastic product. This product is made from sugar cane plastic industry and possibly re-use many times. Sound simple but this product is already sold more than a billion worldwide per year.

Another prove of IKEA concern toward the environment is RYET. RYET is an LED lamp that can save the electricity. In fact, this LED lamp can save around 85% electricity than the traditional product. Not only that, this LED is also having a longer living period around 20 times stronger. ALMAREN and LAGAN water tap can save energy and water while reducing the pressure. This product can show us that IKEA is appreciated water quantity and quality over a longer period of more than 10 years of usage. Those all product can be accessed easily through the online catalog at IKEA website, Google Play and Apple App Store.

Offline to online business, IKEA easy payment through Paypal

Nowadays, the customer is freely used payment method that convenient for them. The addition of Paypal as an accepted payment method will bring a better shopping experience through simplicity and access. Through Paypal, the customerdoes not need to use their credit card or cash for buying IKEA product. eCommerce virtual store makes customer get closer and integrated with every innovation and a new product that offered by IKEA. Having PayPal surely is a progress for IKEA and adding easiness for a customer in payment term. However, not all people afford to have PayPal since the application and acceptance process is complex enough.

For the Asian market itself, PayPal is not something that everyone gets familiar and uses it as a convenient daily payment method. PayPal regulation often finds too strict and make us easily get suspended if our action even a small one is considered to break the TOS. The verification process is also difficult enough. Someone who does not have a credit card will be hard to get verified. Even if we are applying for a credit card to get PayPal approvement then it will be a huge loss since we need to calculate the credit card yearly cost. Besides that, it cannot be used as offline payment and not equipped with a prepaid card.

It will be better if IKEA can find or linked with other online payment method such as venom that can be seen as combination of digital wallet and social media timeline, amazon payment with its secure data system, Google wallet that makes us possible to send money to other just by email or phone number even though the receiver does not use Google Wallet. Other payment options are skrill with its offline and online payment method, Payoneer or 2Checkout. I am sure that more payment option will provide more convenient for the customer to choose.

Income changes after changing from offline to online business

Last year, IKEA sales rate increased around 6 percent. It is possible IKEA has a worldwide business scale in Europe, North America,and Asia. The website itself hasa huge effect on the sales income since it has accessed around 2.3 billion globally.

Social Media Effect on IKEA marketing

Believe it or not, social media development can be useful tools for IKEA marketing. To make the access more simple and easier then IKEA catalog or website can be reached through Google Play and Apple store. In facebook, highest following is in the United States itself. Through Facebook, the customer can access catalog and some video. Highest twitter followers in Canada with 66.000 followers. Pinterest is also playing important role in IKEA marketing though displaying the product and merchandise.

  • Campaign Innovation in Indoor and Outdoor location

Indoor garden in London

With the help of JCCaus and world largest outdoor advertising agency, IKEA creating an indoor garden beside an outdoor bathroom in Paris. Ths method makes the commuter being able to spend some time to examine the outdoor solution that offered.

  • Outdoor campaign

One example is the outdoor campaign in Paris around Gare Saint Lazare. IKEA showing an installed life-sized bathroom which most Paris people have in common in one side and laundry room in another side. Two actors hired to act just like a simple common Paris people doing in their bathroom activity habit. This company chooses to avoid classical marketing strategy that directly comes to the customer and promote their product. This way, IKEA tries to show that they can provide what customer need in any scale size of the room without vanishing comfort feeling.

IKEA is well known for their simplicity, elegant and affordable price. However, their product still considered as a middle-high-end class. As stated by the owner himself that he is willing to create high-quality product that can be accessible by more people. Regarding this, hopefully, IKEA can find the best way to provide more affordable product in hundred thousand prices. In fact, most of their product still considered expensive because the price range is around 1 million and more. It will be great if IKEA can widespread their success by reach more customer without lowering their standard. Just try to find recycle or local material in each region where IKEA store has to create an affordable product. This innovation is simply supporting the success which is already achieved through IKEA strategic change from offline to online business.

 

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