Inside Ikea’s new e-commerce offer

ikeaBetter late than never is the strategy underpinning Ikea’s Australian e-commerce rollout. The Swedish flat pack pioneer has recently begun the process of turning their online presence, which was previously just a digital product catalogue, into a fully fledged shopping channel.

The expansion is set to occur in stages, with click-and-collect services having already launched to Tasmanian customers at the start of this month. This will be compounded by a more comprehensive online shopping and home delivery service that will launch in the ACT from 30 November.

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It’s far from flicking the switch on a nationwide online store, the likes of which most major Australian retailers already have, but according to Ikea’s head of multichannel Michael Donath, Ikea doesn’t want an e-commerce offer for the sake of having an online shop.

“We started in Australia with this multi-channel approach where focusing on the customer journey is really important. We weren’t going to release on any solutions that didn’t focus on what the customer’s needs were,”Donath told Inside Retail Weekly.

“[We want] to ensure that whether you’re shopping online or in-store, the solution is very seamless and unique. It’s about a great shopping experience,” he continued.

Moving towards omnichannel

Ikea is well-known for its unique in-store experience, characterised by large format depots filled with stock and provided ‘pathways’ for shoppers. Whilst Ikea’s website isn’t that different to any other online shopping platform, National Online Retailers Association head Paul Greenberg thinks ecommerce blends particularly well with Ikea’s depot offering.

“It won’t, in anyway shape or form, replace their [in-store] offer – e-commerce will be an addition,” Greenberg told Inside Retail Weekly.

“If you think about the Ikea experience, you browse the store, you’ve got your pencil and, invariably, when you are buying the big stuff, you often have to fetch it at their depot further down the road,” Greenberg said. “[The e-commerce offering is] a lovely blend of that in-store experience which is centred on discovery. Not you can actually take the hassle out of it by looking in-store and then going home and ordering online.”

Donath says Ikea wants 10 per cent of its total sales to eventually come from the e-commerce operation as part of a wider growth strategy that’s seen the company double its Australian store footprint from four to eight over the last few years.

The global retailer has learnt from expanding into the online space in the UK eight years ago, and is now positioning itself to offer an agile platform that can respond to changing consumers, including mobile.

Despite only functioning as a catalogue, Donath says the company’s website pulls in 40 million visits per year – 50 per cent of which come from mobile. IRW understands that mobile shopping will roll out in conjunction with online shopping functionality in the ACT at the end of November.

“We understand that [the shopping] experience is very different on mobile versus desktop. On a desktop, you have more time to search for inspiration and sit down after dinner, versus mobile, where it’s more demand-driven where you’re looking for an answer,” Donath said.

Logistics a challenge, but flat packs ship well

Greenberg expects Ikea to test the waters with e-commerce in the ACT and Tasmania, with the company announcing it will look towards a full Australian roll-out in the next few years.

But logistics are a challenge, particularly for a retailer of bulky goods like bookcases and desks. Donath says that the e-commerce platform will help the company access previously unreachable customers in Tasmania and across the country, but that a significant supply chain investment is crucial to the success of the expanded offer.

“It’s about ensuring that our brand is more accessible across the entire country. Therefore it’s not just about e-commerce; it’s about lots of different touch points. It’s about building new stores as well, building the appropriate distribution centres to support those stores and e-commerce and touch points,” Donath said.

To support the ongoing expansion of their Australian offer, Ikea is investing heavily in distribution centres across the country. An upcoming distribution centre in Western Sydney is set to support country-wide distribution for online and in store customers – playing to Ikea’s move towards an omnichannel retail model.

According to Greenberg, bulky products can be difficult for online retailers to manage in a country the size of Australia and with a smaller population. It may be a challenge for Ikea, but click-and-collect could prove to be a success for them.

“Customers who have had many standard lines as part of their households for many years will buy online and pick up in-store without getting into the queues and going through the long two-kilometre walk through the store,” Greenberg said.

“Don’t forget about Ikea’s flat packs. They ship reasonably well and the bigger stuff like sofas will likely be shipped at full freight charge for customers looking for convenience.”

Only four per cent of Australians have bought furniture online, and Ikea’s move into the e-commerce brings them into direct competition with pure play retailers such as Temple and Webster and Zanui. However, Donath argues that Ikea’s established brand presence and comprehensive offering are poised to win hearts and minds.

“There’s something to be said about our range. [We have] 9,500 products online and in-store available to purchase, and we look at that democratic design where it’s about the quality or the function or the low price,” Donath explained.

“There’s a lot to be said about our range and how we lead that with our offer. As much as that digital experience is important in working across channels, it’s also about how our range is and who we are – it supports our customers in their everyday life.”

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