Ikea Case Study

1. Would you recommend IKEA continue printing and mailing catalogues or should it switch to an online-only catalogue? Explain your answer

IKEA benefits from its catalog channel and should maintain the channel of distribution for these reasons:

• Catalogs hit areas that geographically don’t have the infrastructure for E-Commerce Sales

o Certain markets where IKEA seeks to expand are still developing and may not have internet to drive E-Commerce sales. This would be particularly relevant in China and India where the middle class may commute to an urban center but live in an area not yet serviced by internet.

o While the Swedish are known for their excellent infrastructure and tech-forward thinking, they are also famous for their cold, vast, and remote landscapes. While Gunnar and Elsa are at their isolated summer cabin that’s in the Artic Circle, they should be able to still order a loveseat.

o Even customers who do have access to internet may be glancing over a catalogue and driven to the website due to something that catches their eye. Catalog and web sales support each other.

• Catalogs hit areas that demographically don’t have the propensity for E-Commerce Sales

o Aging members of the Silent and Baby Boomer Generation Baby may still prefer to order via catalogue due to technology aversion, mistrust for banks or the privacy invading e-commerce space, or because “that’s always how I’ve done it.” IKEA will still be able to collect information about the purchase like frequency, volume, preferences, and price sensitivity through these means.

• The catalog layout offers features that make it more advantageous for browsing

o There are no load times when turning pages. Customers who want to look at the new PAX wardrobes for a bedroom remodeling may get turned off when internet is slow or the page doesn’t display properly. Print catalogues do no suffer from these types of technological disruptions.

o Catalogues are easy to pick up, dog ear, and put down. They make for easily consumable material during mediocre primetime television. The accessibility makes it easy to browse an entire 200 page catalog over the course of the week while all but IKEA fanatics would browse every offering on the IKEA website.

Continuing to offer the catalog channel offers IKEA access to customers of more varied demography and geography and the ability to tap in to consumer “browsing” and all the sales benefits incurred from this behavior. Offering a catalogue is more expensive than not offering one, however. It costs money to design, print, and ship such a publication, and IKEA would have to keep this channel with this caveat in mind.

2. What factors