Ikea to launch e-com­merce busi­ness model in Shang­hai

China Daily (USA) - - BUSINESS - By ZHU WENQIAN and WANG ZHUOQIOING Con­tact the writ­ers at zhuwen­qian@ chi­nadaily.com.cn and wangzhuo­qiong@ chi­nadaily.com.cn

Swedish home fur­nish­ings re­tailer Ikea Group will launch its e-com­merce busi­ness in Shang­hai and start to sell its prod­ucts on­line by the end of Au­gust.

This is the com­pany’s first on­line sales at­tempt in the Asia-Pa­cific re­gion.

As a pi­lot pro­gram, the de­liv­ery ser­vices will be lim­ited to Shang­hai for the mo­ment. All of its ready-to-as­sem­ble fur­ni­ture, ap­pli­ances and home ac­ces­sories, ex­cept for food and green plants, will be sold on­line. Ikea plans to ex­pand its e-com­merce ser­vices across the coun­try if the trial run is suc­cess­ful.

The com­pany said that a few years ago it started to de­velop an e-com­merce busi­ness model in Europe, es­pe­cially north­ern Europe and the United King­dom. China will be the first coun­try where it tries out e-com­merce op­er­a­tions in the Asia-Pa­cific re­gion, as part of its mul­ti­chan­nel re­tail­ing strat­egy.

Lu Zhen­wang, an in­ter­net ex­pert and chief ex­ec­u­tive of Wan­qing Con­sul­tancy in Shang­hai, said: “The phys­i­cal stores of Ikea are very big and re­quire large ar­eas. The stores in first- and sec­ond-tier cities are nearly sat­u­rated.

“There aren’t any Ikea phys­i­cal stores in third- and fourthtier cities though the de­mand is emerg­ing, so it’s es­sen­tial for Ikea to launch e-com­merce ser­vices and to serve those places eas­ily in the fu­ture. It would be con­ve­nient to set up some pickup and or­der points in smaller cities.”

In May, the fur­ni­ture re­tailer es­tab­lished a pickup and or­der point in­Wen­zhou, Zhe­jiang prov­ince. The stores in Ningbo, a nearby city, will pro­vide goods for that ser­vice.

“This busi­ness model, with small in­vest­ments, is suit­able for smaller cities, where they don’t have phys­i­cal stores. Ikea will launch more such pickup and or­der points in China,” the com­pany said.

In its 2016 fi­nan­cial year, Ikea achieved sales rev­enue of 11.7 bil­lion yuan ($1.76 bil­lion) in­China, jump­ing 19.4 per­cent year-on-year. Dur­ing the year, about 83 mil­lion cus­tomers vis­ited Ikea stores, up 20 per­cent over the pre­vi­ous year. Also, Ikea web­sites had more than 67 mil­lion in­di­vid­ual vis­its, an in­crease of 25 per­cent year-on-year.

Ikea has opened three new stores in China this year in Chengdu, Suzhou, Jiangsu prov­ince, and Foshan, Guang­dong prov­ince. The re­tail gi­ant said it will keep to its plan of open­ing three new stores in China ev­ery year.

SHE JI / FOR CHINA DAILY

An out­let of Ikea Group in Wuhan, cap­i­tal of Hubei prov­ince.

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