Swedish retail giant Ikea won't bank on e-commerce to drive India growth

It says it is largely a touch-and-feel firm, will use online only to improve customer convenience

Swedish retail giant Ikea is looking at using e-commerce only to supplement sales in the cities where it would open stores 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 e-commerce to improve convenience for customers.

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

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 stores to handle online orders, it says it will not use e-commerce to dig into regions where its stores do not provide 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 move is in stark contrast to the way India's online furniture and home decor players such as Pepperfry and Urban Ladder function, that sell products 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 choice, the company will ensure it can service delivery and assembly of 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, it's 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, everything you ordered must be taken care of by Ikea (delivery and assembly), even then the price will be unbeatable in the market," said Maeztu.