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The IKEA Companys E-Commerce Strategy
After facing the first drop in annual sales in 2013, IKEAs management started to accept the idea of e-commerce in their business. The company was losing its market share to digital stores in the American market. IKEA started digitalizing its business a year later by adding e-commerce services to its platforms (Hagberg & Jonsson, 2022). One of the strengths of how IKEA is using technology to support its e-commerce strategy is through the use of social media. IKEA has been able to advertise its products on social media and then create links that direct potential clients to its e-commerce website. With over 4 billion social media users worldwide, this technology has helped to boost sales (Hagberg & Jonsson, 2022). Another strength is their workforce and leadership, who worked together to embrace digitalization and e-commerce in the company. When the first digital store was opened in Altona to test new ideas, employees and managers went there to see what digital transformation would be like (Hagberg & Jonsson, 2022). IKEA employees and management saw the need for e-commerce, and both agreed to implement it, making it easier for them to coordinate.
IKEAs other strength is that it has a wide range of consumers; therefore, it was easy for them to adapt to the new technology. With a large client base, IKEA has a wide range of technologically advanced consumers. Most of its consumers were already on social media platforms, making it easier for the company to change its strategy quickly. Since the consumers are already used to other platforms which sell products online, they quickly adopted the new technology.
With a wide pool of resources, IKEA found it relatively easy to acquire top-notch technology, aiding e-commerce. Resources are essential when changing business strategies because they cover costs such as acquiring new equipment, adding new staff, and soon (Sentance, 2018). Since IKEA is one of the largest furniture sellers with a revenue of billions, it was easier for them to acquire the needed technology.
On the contrary, one of the companys main weaknesses was its old-fashioned operating style. IKEA had to adapt to new ways of working, which included changing the outlook of its stores to allow for e-commerce features to be installed (Hagberg & Jonsson, 2022). This took a considerable period which is one reason the company was left behind in digitalization by its competitors. The other weakness the company has is its slow utilization of statistical data. The company has a large pool of data, but it took them too long to collect and analyze, which is why they lagged behind in digitalization (Hagberg & Jonsson, 2022). For example, it took too long for the company to implement a contactless buying experience compared to competitors.
IKEA lag in digital transformation led to mistakes in the starting process of e2-commerce. Due to the quick growth of its e-commerce platform the company had challenges in ensuering that all orders were correctly packed and dispatched to the right client. Some times clients would complain that what they saw in the wevbsite is not of the same quality as to what they have phyisicallty received (Sentance, 2018). The company had to increase employees to deal woith the rising number of orders in the company. This affected their growth at fisrt but with time the company was able to cordindate both phyiosical and online stores.
References
Hagberg, J., & Jonsson, A. (2022). Exploring digitalization at IKEA. International Journal of Retail & Distribution Management, 50(13), 59-76. Web.
Sentance, R. (2018). The week in digital transformation: IKEAs evolution, digital leaders behind on mobile & hacker CIOs. Econsultancy. Web.
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