Brief

Ikea sets up shop on Amazon

Dive Brief:

  • A slew of products from Ikea, including lamps, furniture and home goods, are now available for sale on Amazon, with many if not most products available to Prime members with free two-day shipping.

  • Just last week, a spokesperson told Retail Dive that Ikea was “curious” about third-party sales and wants "to explore new areas and get new insights on how to reach and serve more of the many people. One part of that is that we are open to the idea of piloting and testing making IKEA products accessible through other online platforms than our own.”

  • The Swedish furniture retailer has been slow to e-commerce, a fact that former Ikea CEO Peter Agnefjall​ last year attempted to spin as a positive, saying that the late entry could allow more nimble mobile capability from the outset.

Dive Insight:

For Ikea, things have apparently swiftly gone from the idea stage to showcasing products on the world’s biggest e-commerce retail site. Earlier this month, observers speculated about possible Ikea e-commerce partners, floating the possibility of Walmart's new Hayneedle online furniture unit, which was acquired along with Jet.com last year, and Walmart.com’s own marketplace, among others, as possibilities. Amazon, as it so often does, appears to have won, though it’s not clear that the tie-up is an exclusive one.

The idea that made Ikea the global phenomenon it is today — flat-packed furniture that fits into a car — was to have the customer take care of the final stages of manufacturing and the last-mile of delivery. The company known for its cheap-but-chic furniture now operates some 300 stores in 27 countries, and does roughly $36 billion in sales annually. 

But the logistical sweet spot may be why the company has been so slow to e-commerce. Unlike many retailers that have long relied on catalogs to drive home delivery, Ikea has leveraged its catalog to build the brand and make it easier for customers to navigate its massive stores, probably because the size and weight of furniture delivery makes it particularly expensive to sell online.

“This is an area where shipping fees can really take a toll because you’re moving furniture,” Jaimee Minney, VP of marketing and public relations at Slice Intelligence, told Retail Dive last year. “The big challenge, unique to e-commerce, is how best to maximize the shipping and handling aspect. When you have gigantic stores you don’t have to think about it as much.”

The partnership helps further both Amazon's and Ikea's aims. Online furniture sales have emerged as a major growth area in e-commerce, rising 18% in 2015, second only to grocery. Some 15% of the $70 billion U.S. furniture market is now online, according to IBISWorld data. In this environment, Amazon and Target are each reportedly looking to boost their furniture sales, in a challenge to online retailer Wayfair, which does offer free shipping for all orders over $49. 

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Filed Under: E-commerce
Top image credit: Ikea press materials