IKEA expands trading horizons

by Stan Bro

IKEA expands trading horizons: access to Tmall

The sensational news in mid-March 2020 was the announcement of the owners of the production and trading group of IKEA companies about the start of sales of their products on the Tmall trading platform - a marketplace owned by Aliexpress. For almost eighty years of history, the world-famous company selling furniture and household goods will work through a third party.

There are two reasons for this step by IKEA owners:

1) the search for new distribution channels and a significant expansion of e-commerce. Marketers believe that the Chinese Tmall will be a good complement to real sales, which will significantly increase profits. China, in this case, is seen as a key market for revenue growth: buyers in this country are focused on the acquisition of multi-brand products.

Head of IKEA retail chain Reuters Tolga Onku remarked: “Access to Tmall is one of the opportunities to become closer and more accessible for Chinese buyers who are very active in online shopping.” The IKEA brand will offer about 3,800 of its products (out of 9,500) at Tmall. In addition, as an additional service, the delivery and assembly of furniture is offered.

The president of Tmall and Taobao at the Alibaba Group also commented on the news: "Chinese customers love IKEA products for their quality and cool design!"

2) the rapid spread of coronavirus infection COVID-19, due to which IKEA closed all 30 stores in China in January 2020.

This situation stimulates not only buyers, but also sellers to actively switch to online trading. Most people are afraid to go out, and spend more time at home.

Brand owners hope the experience is successful. However, IKEA do not plan to enter the marketplaces of other countries. Abrahamsson Ring, head of the franchising department and assistant to the founder of IKEA, said: “We take into account the specific conditions of each country and do not consider the use of their marketplaces as the main sales channel.”

Today, when quarantine activities are on the decline, IKEA resumes the opening of its outlets in China.