Aims to reach lower-tier cities before expanding physical stores
IKEA Group, the Swedish self-assembly budget furniture chain, is joining a growing number of multinational retailers aiming to tap China's online market.
The company will start a pilot project in the second half of 2016 in some cities where it already has physical stores, Xu Lide, the public relations manager with IKEA China, told the Global Times Tuesday.
She declined to identify the cities.
E-commerce is also expected to be something that IKEA can rely on to woo consumers in places where it doesn't have brick-and-mortar stores.
Before the company enters more second- and third-tier cities in China, "we hope we can let consumers enjoy IKEA's products anywhere and at any time via various channels," said Xu.
"E-commerce is a very good complement to IKEA's [traditional] sales channel," Xu noted.
The world's biggest furniture retailer opened 13 stores around the world in the year ended August 31, 2015. Three of those were located in China's second-tier cities - Hangzhou, capital of East China's Zhejiang Province, Wuhan, capital of Central China's Hubei Province, and Xi'an, capital of Northwest China's Shaanxi Province, according to an annual report the company released in December 2015.
Traditional retailers have been rushing into China's e-commerce market this year. According to the National Bureau of Statistics, e-commerce transactions accounted for 10.6 percent of first-quarter retail sales, which stood at 7.8 trillion yuan ($1.2 trillion).
"Supermarket chains like Wal-Mart Inc and Carrefour missed a window of opportunity to tap China's online market, but it is not too late for IKEA because people in China are just accustomed to buying furniture online," Yan Qiang, a partner with Beijing Hejun Consulting, told the Global Times on Tuesday.
A report issued by Shanghai-based data analysis agency CBNData in March showed that online home furnishing sales in 2015 were up 230 percent from 2013.
IKEA may face competition from furniture retailers on tmall.com, the business-to-consumer site of e-commerce giant Alibaba Group Holding, offering low-cost goods and free delivery service, Yan said.
IKEA said its online prices will be the same as at physical stores. Shoppers will have to pay delivery costs for online purchases, just like they do at the retailer's bricks-and-mortar outlets.
Yan thinks IKEA's online market will be warmly welcomed by Chinese consumers, given its high brand awareness in the nation.
Li Qian, a 29-year-old resident of Xingtai, North China's Hebei Province, agreed.
"I cannot wait to buy goods via IKEA's e-commerce marketplace, which will be very convenient," Li told the Global Times Tuesday.
She likes IKEA's design and quality, but it takes more than five hours to drive from her home to shop at IKEA in Beijing.
IKEA's entry into the Chinese online market is a part of a broader global e-commerce expansion.
It offers online shopping in 13 of its 28 retail countries and regions, and online sales through its website and apps exceeded 1 billion euros ($1.15 billion), according company figures for the 12-month period ended in August 2015.
Lu Zhenwang, founder of Shanghai Wanqing Commerce Consulting, told the Global Times Tuesday that IKEA's core business will still be its physical stores and e-commerce won't do much to boost its net profit. Lu said consumers like to buy furniture at physical stores.
"Trying out big furniture such as sofas and beds at physical stores is a must for most people before they buy," said Li, the Xingtai resident, noting that she doesn't buy big items online, even from such major vendors as IKEA.
