IKEA: Will not use online route to push growth

Swedish retail giant IKEA is looking at using ecommerce only to supplement sales in cities it would open stores in as it aims to grow its business in India over the long term.

IKEA, which will open its first store in the country in December, is not looking at online selling as a way to hasten its reach across the country. Instead, it says it is predominantly a touch-and-feel company that will utilise ecommerce to improve convenience for customers.

"We are not an online company, but we will have online in India and this will add convenience to customers, but whether it is going to be one per cent, 10 per cent, 50 per cent, we don't know yet," said Juvencio Maeztu, chief executive of IKEA India.

Instead of using existing marketplaces such as Flipkart and Amazon, IKEA said it will only focus on selling its goods on its own platform. Further, it will use its megastores as a base to fulfil e-commerce deliveries at least initially, limiting the scope of deliveries only locally.

Even in the near future, when IKEA has warehouses and distribution centres which could take the load off the stores to handle online orders, it says it will not use e-commerce to dig into regions its stores do not service.

Maeztu says IKEA's move to remain predominantly offline is deliberate, since its stores not only facilitate selling to customers, but inspire them about how their homes and other spaces could look. This is in contrast to the way India's online furniture and home decor players such as Pepperfry and Urban Ladder function, selling exclusively online.

"After leaving the IKEA store, your thinking changes completely. You may buy some dinnerware online but a month later you will want to come walk around, have a coffee and a veggie bowl in our restaurant," added Maeztu. "At the end of the day, it's not one or the other, everything gets melted."

Similar to its online presence which will give customers more choices, the company will ensure it can deliver and assemble its products at customer homes. Unlike in other markets, where only three per cent of customers opt for delivery and assembly, Maeztu expects that number to be much higher in India.

For this, IKEA has already floated tenders to partner with service providers in the country. The company says it will demand similar stringent quality and ethicality standards from service providers as it does from its suppliers. While home delivery and assembly services will not be free, the company says that including the added cost for this, its products will offer customers the best value.

"We are not going to be more expensive than IKEA in the rest of the world, which means we will be less expensive...If you decide that for kitchen you ordered everything must be taken care of by IKEA (delivery and assembly), even then the price will be unbeatable in the market," said Maeztu.