Just as B2B distributors are structurally advantaged businesses, we believe vertically-integrated ecommerce businesses are advantaged because of the superior customer experience relative to offline competitors. Companies like Amazon, JD.com, and Carvana vertically integrate into owning inventory, warehousing, and last mile delivery to provide customers with a more convenient, quicker, and typically cheaper shopping experience than incumbents.
We’ve previously explored how Wayfair is following Amazon’s footsteps in the furniture industry through various primary research interviews, IP analysis articles, and an IP Investor Dialogue:
We recently interviewed a Former Deputy-CEO of IKEA Germany and France to explore how IKEA plans to shift from offline to omnichannel furniture retailing. This interview is the first in a series of research to understand the potential advantages and disadvantages of IKEA vs Wayfair’s vertical-integrated online model.
Founded in 1937, IKEA is the largest furniture retailer globally. The company has 458 stores and generated over $46bn in retail sales last year, over 3x Wayfair’s revenue. IKEA runs a franchise model: Inter-IKEA owns the intellectual property, procurement, and manufacturing assets and licenses the IKEA concept to franchisees globally.
The INGKA Group is the largest franchisee and runs stores in Europe and the US which amounts to ~90% of IKEA's total retail sales. INGKA is also one of the biggest shopping center businesses globally with 52 centers in 15 countries.
IKEA’s historical retail strategy was simple: buy great shopping center assets, put IKEA as the anchor tenant, and add other great retailers to increase the traffic to IKEA stores.
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