Successful eCommerce case: IKEA a company and a man

The name of Ingvar may ring you a bell. This man was the seed of an authentic empire that led him to amass a fortune that appear in the list of Forbes: 50,000 million Euros. 

Ingvar Kamprad died last January at the age 91 with the satisfaction of seeing his business in the forefront he always wished. 

Its beginnings as a businessman were in his early 17, when he founded his first company thanks to a bonus that his father gave him as a reward for his great academic level. This small business selling by mail was dedicated to small objects like pencils, postcards, picture frames... eclectic with little margin, but it was only the beginning. 

The company, founded in 1943 was named after IKEA (initials added to the farm where he grew up and his hometown) 

As we said at the beginning, IKEA sold home products, but always in small size and value. It was not until 1948 when he started selling furniture. 

Actually, it was more a test than a firm commitment, but the results were so good that it ended to be a great success. This furniture was not all that different from what its competitors sold by then, but the initial business which had a good segmentation, served as the engine for this type of product, which started being complementary and ended up becoming the core of the business. 

As we said, sales were good and here comes one of the turning points of IKEA business strategy facing the future: research. Kamprad wanted an own product, something innovative and different, allowing him to sell more without increasing the price. 

At this time, appears the concept of self-assembled furniture. For IKEA furniture kits were the future and they began to buy and sell them (they did not design them yet, but they were beginning to consider that) 

We continue in Sweden, it is 1951 and sales are going very well. Kamprad is very ambitious and he wants more, so he makes some very interesting strategic moves. 

IKEA opened its first showroom in Älmhult, a place which invites its customers so that they can experience and prove the products sold by catalogue by themselves (its famous catalogues of furniture that have ended up being a reference) 

Ingvar Kamprad himself  assisted the clients, helped them to decide as other shop assistant. However, he also took the opportunity to draw conclusions that then he applied to his business strategy. 

It was not until 1958 when the first furniture store was opened(already with IKEA design). It was pretty big and more if we take into account that it was opened over a field of potatoes in a quite rural place. 

Its location had many determining factors and a large number of problems seen in perspective. The main thing is that people had to travel from many more or less distant places to access the store when having stores in urban areas.

Would competitive differential advantage of products of good design, medium quality and low prices be enough? Spoiler: Yes, but you already know it (though family shopping experience helped a lot) 

IKEA was excelling strongly. Buyers their product and manufacturers submitted to most competitive prices since they made up the lower margin with a very high volume of sales. 

Competitors were stunned as they saw how a store that did not exist 15 years ago was blowing up the market.The pressure which came to exercise was such that IKEA began  found it difficult to find national suppliers. 

The solution was starting to work with other producing countries, especially with Poland that is closely linked to the brand since the 1960s. Surely this interaction with other countries also kindled the ambition of internationalization of IKEA. The first stores in the rest of Scandinavia began to see the light, first in Norway and then in Denmark. 

Then, stores outside Scandinavia, in Switzerland, Germany, were opened during the decade of the 70s onwards and the rest of Europe (in Spain not until the 1990s), United States... 

I would like to go a little deeper in the product, because, together with the user experience, it is the IKEA´s key to the success. 

Ingvar Kamprad was not who invented self-assembled furniture kits, but it was he who knew how to turn it into an advantage before anyone else. He went beyond making the client to enter the warehouse to look for his furniture and take it to his home resulting a save in logistics. 

Also IKEA has always been focused on the importance of a more efficient packaging. They work both the design of the boxes and the content to make it easier to transport and store. 

And of course, let's not forget that design is one of the driving forces of sales. We can say that, somehow, this brand has democratized design and that cheap furniture do not have to be ugly. In fact, they have opened a path for many other stores that have followed their footsteps.