IKEA Conventional Store vs IKEA Online Store

IKEA is a home furnishing product retailer that began its business in Smaland, Sweden.
The vision is creating a better everyday life for the many people, and supported by the idea that
is offering a wide range of well-designed, functional products at affordable price for as many as
possible people. This main idea was applied from product development and purchases to the
way of selling the products in IKEA stores worldwide. The product was commonly assigned to a
high price if it is good in quality, and vice versa, it would be a poor-quality product on a low
price. In the other side, IKEA focus on making good-quality products at low prices, therefore the
methods that IKEA used must fulfill both cost-effective and innovative, in order to meet
customers’ needs [2]. This store also has a lot to offer everyone in any age and any setting
(restaurant, office, room).

The available products in IKEA store are [2]: Outdoor furniture (such as umbrellas,
outdoor furniture); Eating (such as coffee & tea, dinnerware, tables accessories); Desks (such as
cable management & accessories, conference tables); Children’s IKEA (such as baby toys,
children’s beds, junior chairs, children’s decoration); Cooking (such as ovenware, dishwashing
accessories, kitchen textiles); Bathroom storage (such as bathroom storage & accessories); Beds
& mattresses (such as full, queen, and king beds, single beds, sofa beds); Chairs (such as bar
tables & chairs, dining chairs); Clothes storage (such as hooks &hangers, chests of drawers,
clothes & shoes organizers); Decoration & mirrors (such as frames & pictures, candle holders &
candles, mirrors, vases, bowls & flowers); Flooring (such as flooring); IKEA family products (such
as travel, safety, relax); Kitchen cabinets & appliances (such as pantry, built-in kitchens);
Lighting (such as ceiling lamps, floor lamps, wall lamps, table lamps); Small storage (such as
boxes & baskets, paper & media organizers, bins & bags, food storage); Sofas & armchairs (such
as leather sofas, modular sofas, rattan seating); Storage furniture (such as bookcases, DVD & CD
furniture, interior organizers); Tables (such as up to 10 seats, up to 4 seats, up to 6 seats);
Textiles & rugs (such as curtains & blinds, bed linen, cushions & throws, fabrics & sewing);
Transport & assembly; TV solutions.

IKEA has spread many branch stores in many other countries around the world,
included: European countries (such as UK, Italy, France, etc); Asian countries (such as Malaysia,
China, and Hong Kong); Australia; American countries (such as USA).

IKEA has a website (http://www.ikea.com) to allow the users to purchase an item in the
variety of choices without leaving their home. The establishment of IKEA online store is the way
to generate greater loyalty on customers that in effect delivers greater sales and profitability.
This is one of Adri Kraa’s insights, head of IKEA Shop Online, stated at the Retail Bulletin Summit
2009 that only five percent more retention through loyal customers could deliver as much as 60
% more profits. The need to provide greater empowerment and convenience for customers,
IKEA decided to launch the IKEA online store. “We saw the biggest benefit of multi-channel as
the loyalty effect, which we believed was more important than increasing sales,” says Kraa
[“IKEA multichannel driving customer loyalty”, 1].

There is no problem anymore when there is no IKEA store nearby or there is not enough
time to get to the nearest IKEA store, since IKEA online shopping is right there in front of
customers in wherever they are and at whenever it is. IKEA can offer a select range of their most
popular furniture products to be purchased online and then shipped directly to customers. It is
easy to shop the products on the website and just adding to the shopping cart when the
product is available [2].

How to E-Shop

1. Selecting a category, product, type, and item [2]

 To start shopping, customer can choose the product categories option

 In the chosen product category, then customer select a certain product

 In that certain product selected, customers are required to pick its type

 The listings of items in that certain type will appear in the web page

2. Purchase an item (selected) online [2]

 If the item has more than one color or size option, there will be a menu showing the
options, pick one of them that is wanted, then price and related information will be
updated accordingly

 Once have finished to select the item(s), it should be added to shopping cart

 The item(s) selected can be reviewed and edited to change the quantities. Customers
can back to shopping as many times as they need

 After satisfied with the item(s) selection, then customer can checkout out of the
shopping

3. Billing & Shipping [2]

 For returning customer, just doing a login by entering username and password. For
new customer, should fill the buying purpose option for either business or private
home
  Enter a valid billing information shown in the credit card account, otherwise the
order can be delayed or cancelled

 Enter shipping information, which can use the same detail of billing information

 Read the privacy policy, then accept it to proceed the process

4. Review the order, all information, and the item(s) selected [2]

5. Payment [2]

 Enter credit card information. IKEA accepts: VISA, Mater Card, American Express,
Discover, IKEA Credit Card & IKEA Gift Card

 Verifying the payment information, read and sign it to agree on the terms &
conditions, then submit the order

6. Customers needs to save a copy or have an option to print the receipt [2]

 Receipt contains of unique order number, list of the items purchased, date when the
order will ready to ship

The Conventional store

Benefit and Disadvantages for the customers:

 Benefit for the customers:

o Customer will be able to test out the furniture and see its size in closer

o IKEA has clearance items that customer may not be able to find online

o The IKEA store’s atmosphere is very different so customer can actually

experience the creativity of the store

o Customer will be fun to spend a day out at IKEA, because of many services IKEA
provide to keep the people happy

 Disadvantages for customers:

o Customers have to maneuver large furniture by themselves

o Customers must have suitable transportation to get to the store then to fit the
furniture into it while carrying around that IKEA stuff from the store to their
house
Benefit and Disadvantages for IKEA:

 Benefit for IKEA:

IKEA’s sales people can get in touch directly with customers who coming in to the stores
to look around the products, so the sales people can apply their sales strategy and other
services to persuade and convince the customers (who may be previously not intended
to buy) to buy the item

 Disadvantages for IKEA:

IKEA must build enough or even very large size of stores which were very overwhelming

The Online Shopping / Store

Benefit and Disadvantages for customers

 Benefit for the customers:

o Customer can purchase the items online in anywhere and anytime to save time
waiting in line

o Customer can avoid queue lines

o Customer does not need to leave his/her house and pay in the cashier to have
the item delivered

o Customers also can :

 View the store’s attractive catalog which IKEA offer a select range of their
most popular furniture products

 Check a store’s stock availability

 Find out the nearest store location from home

 Apply for credit card

 Get tips on shopping at IKEA

 Ask a virtual Employee

o Some discounts offered online are only available online

o The customers not living at IKEA nearby still can buy the IKEA products
 o Easier to do and quicker processes. customers just adding the chosen item to the
shopping cart when the product is available

 Disadvantages for the customers:

o IKEA has many different aspect, some items which are displayed on the website
are only able to be bought at the store

o Customers can not get to see, touch, testing the items in person

o Customers miss out on any sales, or limited amounts of new arrival items that
IKEA may have only in store

o Customers must pay extra charges / cost to get the items shipped to their house

Benefit and Disadvantages for IKEA

 Benefit for IKEA:

The products can easily reached and viewed by consumers anywhere worldwide,
especially for the people who live in the area which does not have IKEA stores there

 Disadvantages for IKEA:

o IKEA needs additional department for IT staff or outsource IT guy from IT

software Consultant Company that will consume more expenditures. This is to
develop and maintain the IKEA website; the stocks availability displayed in that
website must be updated.

o IKEA needs extra works to organize and manage a shipping and handling
processes for the item(s) purchased by customers

What if IKEA only depend on the conventional store without the additional help of its online
store?

As mentioned on the above according to Adri Kraa’s insights (head of IKEA Shop Online)
that the establishment of IKEA online store is the way to generate greater loyalty on customers
that in effect delivers greater sales and profitability. The multi-channel way increases the loyalty
effect.

Therefore, if IKEA’s conventional stores just stand alone to generate its whole sales, then
it only come from the customers who are living around IKEA stores, whereas other potential
customers who are far away from IKEA stores experience difficulty to reach the stores. There are
some people also do not even know at all that IKEA exist. For example, we do not have IKEA
stores in our country, Indonesia. I conclude that the IKEA greater sales and profitability from
customers’ loyalty are quite impossible to obtain.

What if IKEA only depend on the online store without the existence of its physical store?

There’s no real experience felt by consumers of the product design and atmosphere
before they deciding to buy and own the products, in effect the delivered product may not fulfill
what they expected and saw in the IKEA website. However, the experience of the store can’t be
compared to shopping online at all.

Reference

[1]. www.retailcustomerexperience.com/article/3625/Ikea-multichannel-driving-customer-
loyalty

[2]. www.ikea.com

[3]. www.slideshare.net/lainaeds/ikea-brick-click