Wednesday, October 04, 2006

What Ikea Could Learn from Amazon

There are some basic flaws (annoyances for consumers) with the Ikea superstore model as it works currently (or doesn’t in some cases).

First, you can select all the right bits and pieces, make diligent notes, but then in the self service area (where you go to pick up all the components of your cupboard or table or shelves… ) you may well find, as we did, that the colour you chose is out of stock, or perhaps the model itself. This is despite being told upstairs that things were in stock. One explanation here is that the last piece may have been sold and collected between your seeing it and collecting. As this gap may be an hour or more for a lot of people, this is quite likely.

The second challenge is the sheer physical work involved – K and I struggled and at times I was picking and trolley-ing boxes which were marked as “2 people required for safe handling”. I saw lots of people struggling with the weight of the material and anybody not used to lifting say 20-25kg weights and being able to handle the unwieldiness of boxes 6 feet long, must not try this alone!

A final issue is that often people make mistakes or Ikea themselves do. My friend Carmen was stuck at checkout because they insisted she had only picked up 3 legs of the table she chose and they refused to facilitate her paying and then providing the 4th leg. Our cousin Kiki came home to find his chest of drawers had a drawer less. On calling Ikea he was told that they would need to watch the CCTV footage to assess the veracity of his claim.

All of this can be avoided if Ikea takes a leaf or two from Amazon. The Ikea experience is similar to Amazon in that the buying decision is segregated from the fulfillment. Of course in Ikea the payment comes right at the end. Here’s how it could work a la Amazon.

Ikea should have “electronic” payment stations situated across the store itself. Customers could get hand held equipment (these can be rented for a price) which allow the creation of a “shopping basket”. By linking this to the inventory position in the store, customers can first, get a near-live update of the stock position and can make substitution decision while in the store itself. When customers are ready to complete their purchase they could do so on their handheld or at payment booths scattered across the store.

Fulfilment should be done by professionals, using RFID and other automation technologies, so that when an order is placed, the Ikea trained people can pick, stack and have it ready for collection at the gate. This avoids customers having to wrestle with both the weight and shape of packed desks and bookcases. The use of effective technology is a key issue for ensuring that across the entire store the stock position is accurately mentioned to the last unit.

You can even imagine “warnings” given to shoppers who have chosen an item which is down to (say) it’s last 5 pieces – so they would know that they needed to have a back up.

Finally, by the method above, the number of errors will come down, simply because of better trained people and better use of technology. Replenishment also will be faster as you wouldn’t have shoppers meandering through the store trying to push a 100 kilo trolley around other shoppers.

The phrase “Click & Mortar” used to be a popular phrase a few years ago, essentially to imply that virtual retailers needed to adapt parts of their physical brethren. It is perhaps as relevant for real world retailers to pick up the odd leaf or two from their online colleagues.


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