Ikea launches virtual store on Alibaba to lure Chinese consumers

Furniture retailer ‘tests’ selling to consumers on ecommerce group’s consumer platform Tmall

Ikea is for the first time selling its flat-pack furniture through a third-party ecommerce website as it launches a virtual store with Alibaba in an attempt to reach more Chinese consumers.

 

The world’s largest furniture retailer has been looking into whether and how to sell on the leading online websites for more than two years, since it disclosed plans to the Financial Times in 2017.

 

It began selling Nordviken tables, Hemnes chest of drawers and 3,800 other products on Tmall, Alibaba’s consumer platform, on Tuesday. Jon Abrahamsson Ring, incoming chief executive of the brand owner Inter Ikea, called the move “a test” and placed it alongside a shift to smaller stores including in city centres, as well as augmented reality apps and home delivery and assembly services, to illustrate how the retailer is transforming itself. Ikea products are sometimes sold on third-party websites such as Amazon but not directly from the retailer, and often with sizeable mark-ups over its store prices.

 

Inter Ikea executives had ruled out selling on Amazon last year and explained that the challenges of selling its flat-pack products through an external website were proving harder than expected to solve. It was particularly worried about keeping its identity on a third-party site. Tolga Oncu, retail operations manager at Ingka Group, the main Ikea retailer, said on Tuesday: “This is work that has been ongoing for some time: to figure out the steps we need to take in China in order to reach many more people — where they are shopping, where they are spending time. It’s the same procedure as when we decide to expand with a store.”

 

Ikea is in the middle of the biggest transformation of its business model in 77 years as it moves away from forcing people to come to out-of-town warehouses and then transport the furniture home to assemble it towards giving customers the opportunity to buy online or in city centres and pay extra for optional services.

 

The new Tmall store will initially serve customers in Shanghai, Jiangsu, Zhejiang, and Anhui with a goal of bringing it to other cities later. Ikea and Tmall will also look into other possible collaborations including looking into future trends for life at home of Chinese consumers. Ikea has also hinted it was looking into an online sales platform for furniture that could include goods from rivals in something similar to what Zalando and Asos do for clothes, the outgoing chief executive of Inter Ikea told the Financial Times last year. It is also testing renting out furniture in several countries, seeing whether subscription services to students or small businesses can take off. Ikea has been relatively slow to adopt ecommerce in China, which accounts for 6 per cent of its global revenues. It started online sales on its own Chinese website in 2018, but they accounted for only 5 per cent of its revenue in the country last year.

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