IKEA Home Delivery - Why It Will Never Pay 
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Why is it so difficult to buy things from IKEA’s website? If you’re like many who’ve tried to shop IKEA online or through IKEA’s phone order service, IKEA Direct, you’ll know how irritatingly frustrating an e-commerce experience it can be. From the limited inventory to the outright outrageous shipping charges, IKEA is just not friendly to the home shopper.
All that stuff is already flat-packed to reduce shipping costs, right? So why does it cost a fortune? Find out how an internal memo from over two years ago spelled out your fate as a consumer and the future of Home Shopping at IKEA … after the jump.
Current IKEA Shipping Rates
IKEA Shipping for most orders less than 70 pounds are shipped through UPS. Does IKEA offer reduced rates based the economies of scale? Seemingly, no. This is a table for rates for shipping from IKEA within 210 miles of a store/distribution center:
As you can see, any item under $20 could cost you nearly as much in shipping! The same is true of a store in the Midwest – nearly 1000 miles away. Why is this? Does IKEA have a death wish for their Online Sales and Phone Sales Channels? Apparently so.
No Further Investments in Home Shopping or Online Sales
For years, we IKEA aficionados have bemoaned the sorry state of IKEA’s home delivery options. To my great chagrin, IKEA continues to delude the common consumer into believing that they have a valid e-shopping option available:
Although thankfully the website has undergone a vast improvement in the last year or so (if you leave out the large quantity of Flash), ordering online is still virtually impossible and at a minimum, it’s excruciatingly painful. Even IKEA’s phone order service, IKEA Direct, has been difficult to work with, lacks in a full inventory from which to choose, and charges outlandish prices for shipping. And if an order arrives damaged or incorrect, you are often at the mercy of whoever answers the phone or at worst, up the proverbial creek. Even so, we all held out hope for the future.
Then in December of 2007 an IKEA insider privy to internal IKEA information, IKEA.Employee, let us in on the existence of an internal memo that spelled out the fate of IKEA Home Shopping. I was able to obtain the complete text of the document and will share key points with you, though I can’t reveal my source or the text in its entirety.
From an internal IKEA memo, dated December 7, 2007:
In the future, there will be no further investments to develop the Home Shopping or Online Sales channels … The decision by the board is based on the conviction that IKEA can give customers the best offer and the lowest price by making the range available only through the stores. Home shopping and online sales require considerable investment and a specific distribution set up, which is a big undertaking. Today we are not prepared to make that committment.
Although that memo was issued over two years ago, we’ve not seen any changes to date in the existing e-commerce experience, nor has there been any indication that IKEA is ready to pull the plug on Home Shopping just yet. But they’re not investing any more in the future development of these channels, either.
WHY IKEA Won’t Expand Home Delivery Services
Recently, I spoke with Joseph Roth, IKEA’s US Director of Public Affairs. I asked him about IKEA’s future plans for e-commerce and distribution in the US and the planned Midwest Distribution Center in Joliet, IL. He gave me a few key insights as to why home delivery will never pay at IKEA:
- The above-mentioned memo states,
“the IKEA Group shall concentrate its resources on developing the IKEA stores as the only sales channel and to make an even more attractive shopping experience for our customers.”
The IKEA Experience is all about being in the store – seeing the furniture in the showroom vignettes, getting ideas from the room and home setups, and hitting the AS-IS room. From the moment you step in and smell that cinnamon roll scent wafting through the store, you’re in another place mentally …and all that translates into a bigger bottom line.
- The instant gratification of online shopping precludes the build-up of excitement before an IKEA store visit. Many of us aren’t within an easy driving distance to IKEA (IKEA is only in 19-20 US States), so it’s a commitment of time, and a day-trip for the majority of IKEA US customers. This lends to the fanatacism that is evident here at IKEAFANS and elsewhere – people look forward to a trip to IKEA.
- IKEA’s distribution network is not set up for shipping individual items. IKEA’s distribution is based on mass quantities moving in the most efficient manner possible – not on shipping to individual homeowners. IKEA does not consider Home Shopping as a factor in their distribution network AT ALL. In response to the cry that ‘IKEA is everywhere, why can’t they just expand the delivery service?!”, Roth says,
We’re not everywhere. We have only 37 stores in the US and we’re only in approximately 20 states. In Florida for example we have only 3 stores, and only one of those stores is in South Florida. 2/3 of our stores in the US are East of the Mississippi.
This doesn’t lend itself to efficient distribution to the level needed to make a home delivery option profitable.
Insights on IKEA’s Business Model
We also talked with Kelly, a Vice President in a Fortune 300 company, who has more impressive insights than we do personally. She says,
I think IKEA dabbled in online commerce knowing that they would make money, but never truly committing resources or thought leadership on how to integrate it with the rest of their business because key players weren’t behind it philosophically. IKEA has a flat org[anization] structure that defers to the local in the stores- but Home Shopping was a Home Office controlled program. And I think they always felt it undermined the store and didn’t serve the range.
Another long time IKEAFan, Narf, says,
The economies of scale aren’t there for larger items like furniture – not only would a lot be considered “oversized”, but package handling by any of the common shippers rarely is with enough care to assure safe arrival.
True enough. Many online merchants are offering small items for sale, like online retailing giant Amazon, whose average sale I imagine is far lower than the average IKEA sales receipt. Far too many equate IKEA’s online shopping dilemma to be similar to that of Amazon. But it’s not the same.
Joseph Roth, IKEA’s US Director of Public Affairs says,
We are always striving to improve, however we are not trying to make [our online experience] like, say…Amazon. The IKEA experience will always be an interactive one, the way it currently is. Shipping a BILLY Bookcase is still going to cost $50-$60 [in the future]…
IKEA is simply a different business model – one that demands an in-store experience. In sum, IKEA will never be an affordable option for home shopping…it’s just not meant to be.
Tags: IKEA Delivery, IKEA Direct, IKEA Home Shopping, IKEA Online, ikea website
my first ikea purchase was online waaaayyyyyy back in…? yes, i ate a lot in shipping (i think my as-is purchases to date have corrected that :D ), but i had to have the stuff i ordered and, once it arrived, i was hooked and telling anyone who’d listen about ikea. also prayed for a nearby store and was hoping one would be built near boston, but we got one in NEW HAVEN, CT. so i went. twice. and prayed again for something closer. STOUGHTON! YAY! AS-IS! YAHOOEEE! but when you gotta have it, you do whatever it takes. if that means paying for shipping, then so be it. i never regretted that first purchase.
OK, what about the “out of stock” dilemma? I recently purchased a mattress at a store. They did not have the “SULTAN LAXEBY SLAT BASE QUEEN” in stock. I live 3 hours from the store. Upon arriving at home, I attempted to place an order for the base. The price of the item was $150. The “center rail” was $10.00. Shipping? $235. I was told that it could not be shipped via UPS. I know that not to be true because it is in two parts, and each is well under the weight and size restrictions for UPS. Fragile? I sure hope not. It is a mattress base.
Here is my real beef. If IKEA chooses not to be an online retailer, so be it. It is their choice. BUT the clerk who waited on me suggested that I order it on line. He had an obligation to tell me what the shipping would cost. I never dreamed that it would be so rediculous. No, I probably
won’t be shopping at IKEA again.
Oh, by the way. Is there a niche reseller market here? If I lived near a store, I could sell that item to someone on ebay, charge a healthy but reasonable “shipping and handling” fee and perhaps make a tidy profit. Bet a team of two could clear $1,000 or more per day. Hard work, but honest. Of course handling returns would be a little muddy.
I doubt that Ikea can hold out for long. We dinosaurs are dying off and the young trendy urban dweller is all about convenience. They may not even own a car. Who has hours to wander thru a store? Ecologically, a delivery truck making 6 stops is greener than 6 cars driving to a store. Yes, a few of us look forward to a day at the store. But most folk would rather pay more and order from CB2. Truth be known, the “store experience” is pretty boring after the 2nd or 3rd time. Aren’t you a master of the shortcut?
Not only is Ikea a flat organization, but a family held one too. With an honored 84 year old founder. I’m reminded of Publix founder George Jenkins whose strong Christian beliefs kept Publix away from the liquor store business. Now, after his death, Publix is a top liquor outlet. People may not want change, but time and tide move on…
I would guess that over half of IKEA’s products are furniture, which is heavy and expensive to ship. (How would they ship a matress?) The items are not really packaged well enough to handle any rough treatment by a shipper. Drop a cabinet or dresser box on it’s corner and the item is damaged. Who is going to pay the shipping to send the item back–the customer or IKEA? Either IKEA loses any profit on the item or the customer pays twice for shipping and loses any cost benefit of buying from IKEA in the first place. Plus someone is going to have to process return items. When you see an item in a catalog it’s hard to tell if you will really like when you get it. When you see the item in the store, it is easier to see the exact color, size, scale, etc., so you are less likely to buy a wrong product which needs to be returned. I don’t see how online ordering/home delivery would ever be a viable option. Yes, the trend is to be an urban dweller, but people in large cities have been furnishing their homes for years without IKEA home delivery (is Europe more urban-centric than the US?). I personally love to wander around IKEA, although as I visit every week as I slowly remodel my kitchen, I think I could use a break. I also found several usable pieces in the AS-IS section which saved my some money (for example, an $82 cabinet door with a minor scratch for $1, which I can put in a corner of my kitchen where no one will notice the scratch at the top of the door).
Not meaning to gloat, but this is only a problem in some places. Here in the UK, there are 18 Ikea stores (in a country that the CIA tells me is ’slightly smaller than Oregon’). There are 7 stores within a 90 minute (off-peak) drive from my house!
The distribution infrastructure required to serve such a dense store network means that home delivery here is far easier and cheaper. Items small, light, and robust enough to send by parcel courier cost between GBP7.5 and GBP15 (that’s roughly USD11-22) per order (an order can be up to 75kg (165 pounds) if it is lots of small items). Heavy or fragile items are delivered in Ikea’s own trucks, with a two-man crew – to my address the charge is GBP35 (USD55) for as much furniture as I can order.
I can understand Ikea’s reasons for ‘abandoning’ their home delivery service in the USA for the time being – the low density of both the store network and the population make such a service prohibitively expensive. In time, however, as the popularity of Ikea grows, there’ll be more stores, and as that happens the chances of them building a decent home delivery system improve.
If you want the best service, you should probably move to Holland – they have 1 Ikea store per 3667 sq km, compared to the UK’s 1 per 13444 and the USA’s 1 per 247621. The Dutch have an Ikea density 68 times greater than yours!
I messed up my sink base so need to get another one – it costs a mere $44 on the website. I was just quoted a price of $249 to ship it 100 miles!!!! How can I get the more reasonable price quoted above? I’d pay $40 if it saved me a day trip and having to rent a car. But surely not $249!!!!!!!!!!!
In my view, it boils down to IKEA’s mindset that the in-store experience is what they sell; they want the customer to experience the culture – both of the store and its Scandinavian origins, right down to the meatballs & lingonberries. To their credit, it has emblazened their brand & identity in stone.
In this day & age, I’m not sure that seeing it as black & white as, “come to the store or don’t get it at all”, is the wisest approach economically.
What’s the difference between ordering something you’re disappointed in & return, and not going to the store at all? It’s still a lost sale.
Why not find the gray area that takes advantage of the potential online revenue stream *and* have a few stores?
It’s ironic that in one breath IKEA can say this (from this thread here):
IKEA is continuing to explore opportunities to develop new markets and add additional stores to existing markets.
But then decide investing in online sales mechanisms that work well is not the direction to pursue.
So the real choice is, do they want to
A. Continue a great relationship [online] with a highly loyal customer base (that may not live around the corner from the closest store); or
B. Try to cultivate more highly loyal NEW customers at the risk of ignoring the interstitial community that lies between all its physical stores?
Why can’t they do both? Why don’t they alternate years they open new stores with years they refine an online market?
My link didn’t come thru for the (from this thread here) comment above:
http://www.ikeafans.com/home/ikea-coming-to-my-town-new-stores/
I’m in the home delivery logistics business and I had spoken with IKEA Direct back in 2004 regarding their home deliveries. I couldn’t understand that items purchased on-line where shipped direct to the consumer from one distribution center in Baltimore, MD, eventhough they have distribution centers covering all regions of the US. Furthermore, they were using a number of carriers in the distribution channel to handle the same items. This is most likely the main two reasons for their high shipping costs.
I recently moved to Albuquerque from Southern California. I wanted a number of items from IKEA they were bloody heavy items and I have a compact car plus making getting them home to So Calif problematic. Then, I would have had to pay to have them moved with the rest of my furniture. So, I decided to buy them online after I arrived in ABQ and have IKEA ship them. It was painless even if the shipping was high. Customer Service was good. I got what I wanted and alternative choices from other vendors would have cost me more.
Now, I would like to redo my kitchen with IKEA product but that would really be difficult online. So, either I go to Tempe and figure out a way to truck everything back myself, wait for another 150,000 folks to move to the ABQ area and hope we get on the new store list, or forget it.
Anyway, from my perspective, some purchases are reasonable online – some are not. It would be great if IKEA put more $$ into ecommerce ’cause there are a growing number of folks who really do the majority of their purchases online.
I’d say the IKEA people know their business, and are successful with their business model. They are happy at the profit level they’ve currently achieved and are at peace.
.
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They are not threatened by the competition, in fact just the opposite is true. They seem to have a good bottom line. Why grow the business in a direction they are not comfortable with?
As for young people not having the time to spend in a store, I gotta disagree. Whenever I go to either the Stougton or New Haven store, there are all ages present. Young couples, gay couples, Twenty and thirtysomethings, what I don’t see is only an older demographic.
The problem with IKEA USA is that not only have they not developed their online sites, they also have not developed their store sites as well. Their business model is based on small scale development in or near mega-large urban centers. Their online shipping is too expensive because their mangement has failed to negotiate with their shippers or they do not have a sufficient brand base to do so because they have not developed their retail market. IKEA USA is poorly managed, in my opinion, and probably lost a lot of money during the recent down turn when people were moving and downsizing, exactly, IKEAs forte, supposedly. Instead of buying a bed from IKEA and chose another company, with same quality or better.
Recently I went to two different Ikea stores and found it to be probably the most miserable shopping experience I have ever had. In both cases, I abandoned merchandise at the register since the difficulties with the check-out topped the problems on the floor.
I thought I would buy some products I liked online and to my surprise the shipping was more than the merchandise.
Everyone told me not to buy from Ikea, and now I certainly won’t.
You’re totally right about the shipping. To be brutally honest, IKEA shopping for heavier products in particular really is best done when you can take it home yourself in your vehicle/uhaul etc. Sorry you had such a rough experience :-(.
Yeech! I’m planning to do a real redo in my living room and study. I used the online system to plan and found the “besta planner” helpful — though sometimes hard to find. Because some things weren’t available online, I decided to go to the store. But the problem was, some of the things in the store were out of stock. I was prepared for high delivery prices, what I wasn’t prepared for is a system where you have to make all your purchases at the store and shlep everything over to the delivery desk. It would take MANY trips to the store and a constant survey of what’s in stock and paying for each separate delivery to get all my items. I don’t understand why I couldn’t just ORDER the items I wanted and get delivery when everything is ready. Because I couldn’t, I bought what I knew I couldn’t get online and went home. Then once I had my online order ready, I get a message to REVISE my order because of the items are out of stock. I can’t find out which ones online (only at the stores). This is nuts. I’d spent a lot of time measuring and figuring it out. I was prepared to pay the delivery charge. I’m back at square one. Even if I RENT a truck and get my nephews to help haul the furniture, they won’t have everything in stock when I get to the store.
We’ve been doing a whole-house remodel, largely with IKEA stuff… we’re huge fans, and that ain’t changing. However, driving from the West SF Valley to Burbank means at least a half-day commitment, and we’re short of time as it is. We used Adel cabinets in three rooms, which ended up taking us three trips to pick out and purchase… and on one of those trips, our associate didn’t add Integral hinges to the order. Stupidly, we didn’t think to check it either… so when I was assembling the cabinets for the last bathroom, guess what? No hinges.
Those hinges cost $5 for a pack of two (I need three packs) – they are a great design and an incredible deal. But they want $21 to ship my $15 order! I’ve been trying to find a shipping discount code – no luck so far. Alternatively I’m trying to add enough other stuff to my order so that shipping won’t be such a huge proportion… but half the items I want say “Sorry, this item is not available on-line.”
We love IKEA enough to put up with their quirks, and I’m sure they’ll survive our irritation; even though we buy from e-tailers all the time, we still go back to Burbank. But it’s frustrating.
It is a great dissapointment that the shipping is so overpriced!
As an example, I browsed for a bookcase and a chest of drawers. Total before tax $208. I live in the High Desert over 100 miles from the nearest Ikea (Burbank, CA) So the option to purchase online makes great sense for me. The shipping cost alone was $350 giving a total of over $550. The other option for me would be to rent a car, travel down to the store collect the items and drive home. Probably taking a minimum of 7 hours – if I rush.
I love Ikea, having shopped in Europe as well as the US, but surely they could find a feight company that cut them a deal. Im sure that would make better business sense in the long run.
Come on Ikea, you have always been at the cutting edge of new innovations, but you are WAY behind the curve when it comes to the now fangled internet thing ! !
It’s a shame that IKEA doesn’t do more online ordering and shipping. I love the IKEA stores but the closest location is 1600 miles away from where I live. I would love to redo my kitchen with products I have found in their catalogs but it isn’t worth the cost to me to have to drive that far, stay at motels and then rent a trailer to bring the products back home. I wonder if they realize just how much revenue they are missing out on by not shipping products to people who would love to have them. I certainly don’t foresee any IKEAs being built in Montana so guess they won’t get my business.