E-Commerce @ IKEA

I’ve been getting a few emails from readers (which is kinda’ fun) about things I’ve said on my blog, things they’ve liked and some even asking me for advice! Note: Use my advice at your own risk!!! ;)

A student recently emailed me saying he was doing a paper on IKEA’s e-commerce strategy and asked me if I could help him out. For some reason I tend to agree to help complete strangers! lol Some of the questions were pretty general, so I just wrote whatever came to mind. There’s no confidential information in here, so I wasn’t worried that this could be a competitor pretending to be a student (although that would be pretty sad! LOL). Below is what I wrote. I think some of you might find this interesting.

Ian: Thanks again for providing me a few answers to my questions. The class that I’m taking is e-commerce, so most of the paper will be around these types of questions:

Overview of e-commerce implementation to date within the company

This was answered in the previous email right?

What went wrong and what went right?

Right

• The launch and pre-launch ad campaign went well. We had released a ‘wish list’ type feature on the site which was a great preview for the shopping cart which was to come. The site was able to handle the massive increase in volume (i.e. traffic) without any hiccups. We had good website support from our vendor at the time. I had to put in quite a few long days, BUT the whole rollout went according to schedule.

• We had an excellent team working on the project. We selected all the right people with a variety of skills and strengths to work on this and I believe that was key in making things go smoothly.

Wrong

• The product listings were setup for stores NOT home shopping; thus there were numerous products that the clients could put in their shopping carts, but these items were not sold by telephone ( e.g. fragile picture frames, small widgets, etc.)

• We hadn’t anticipated such a huge increase in orders that the backend infrastructure (to book the orders and call clients back) wasn’t in place. I (along with a member of the IT team) had to design a custom application which would scan an email order, read the products and automatically book and sort orders into the backend systems. Some details on that in this entry: http://the1truecoolguy.blogspot.com/2005/08/how-being-lazy-has-helped-me.html

• Not sure if this is “wrong”- but, we were debating whether to have a different shipping cost structure for clients placing orders on the web given that weborders cost us less to process. As I recall, we opted for the same cost structure, but we sometimes had online coupons that could be redeemed for shipping discounts and/or other specials.

What ROI or benefits can be documented?

As mentioned, I can’t get into specifi ROI details or costs, but please refer to my resume at http://jmsb.concordia.ca/~i_selvar for the $ benefits

Where does it stand compared to the leaders in its industry?

You would have to do comparisons with other furniture stores and tell me! :) (I’d be interested to know this)

What challenges and priorities do you see for the future?

I always felt logistics was one of our biggest problems. We do very well considering the size and scope of our [worldwide] logisitics, however things could be improved as IKEA is known for having issues with stock levels (e.g. I just visited the store yesterday to buy some storage bins; they have received 1,000 lids for bins, but the bins themselves are only arriving in a month!). This is an overall issue with IKEA, not specific to ecommerce. However this will definitely have to be addressed if the website becomes fully transactional and things are not in stock etc (i.e. how exactly will you handle backorders online?). One of the services home shopping offered was to maintain backorders and call clients when the items came in. In stores, if the items were not in a client would have to keep coming back to check. Will it be the same procedure online? Will the customer buy half their stuff, pay shipping, buy the other half and pay shipping again?

As to ecommerce/home shopping specifically: I believe the shipping network will have to be looked at (many clients think our shipping rates are exorbitant) and then they can come up with more reasonable shipping rates. Shipping costs are probably one of the most difficult things for online retailers to deal with. Charge too little and you WILL lose money; charge too much and people will think twice before buying from you. Think about it- your $100 bookcase might end up being double the cost now because of shipping- odds are, you’re better off buying it locally.

What challenges or enhancements in e-commerce strategy do you recommend?

The obvious one: To have fully transactional ecommerce ( i.e. no offline work required except for customer service/after sales issues). As to the rest, you tell me… :)

I decided to focus on North America versus overseas. Was the US prior to Canada implementation? Thanks for all your help!

US and Canada did our implementations more or less in parallel, but from what I can remember we (Canada) were first. Let me know if there’s anything else you need

Cheers,
Ian

A quick update to the penultimate question: word on the IKEA street is that they will be having fully transactional ecommerce very shortly. However, this was the word on the street back when I was still there… lol