IKEA assembles first third-party virtual store on Tmall

IKEA has set up shop on Alibaba’s e-commerce platform Tmall, marking the first time the Swedish furniture retail chain is peddling its products on a third-party online marketplace. It hopes to use the platform as a testbed and assess the feasibility of including third-party marketplaces into its channel strategy. 

The move also would enable the IKEA brand to be more accessible to consumers in China and provide learnings about customer engagement, according to a joint statement released Tuesday. The new virtual flagstore store on Tmall would offer some 3,600 IKEA products. 

“The partnership provides an opportunity for IKEA to learn about this new format as a complement to its existing customer meetings. Based on this test, IKEA will evaluate if, and how, third-party platforms fit into IKEA’s channel mix,” the partners said.

As part of efforts to widen its global reach, the Swedish chain said it had been experimenting with new formats in recent years across various markets. These included the opening of smaller shops, planning studios, and mobile apps. The store also launched e-commerce services in more than 50 markets including Singapore.

According to Jon Abrahamsson Ring, managing director of Inter IKEA Systems, which owns the global franchise, the retail chain clocked more than 1 billion visitors a year worldwide. 

Through its partnership with Alibaba, the company hoped to learn how to further enhance its service offerings and expand its reach, said Tolga Öncü, retail operations manager of Ingka Group, the holding company that owns IKEA stores. 

The launch of the virtual store at Tmall is truly exciting and we believe it will complement existing sales channels such as our IKEA stores and e-commerce as we come closer to our customers in China,” added Öncü.

Alibaba’s commerce business, encompassing its retail and wholesale e-commerce as well as logistics businesses, contribute the bulk of its revenue. In its latest financial quarter, the segment accounted for 88% of its total revenue and grew 38% to hit 141.48 billion yuan ($20.25 billion). It also added 18 million active consumers to its retail marketplaces over the previous quarter to reach 711 million, while mobile active users totalled 824 million, up 39 million from the previous quarter.

More than 60% of its new annual active consumers were from China’s less developed areas, according to Alibaba. Its 11.11 Global Shopping Festival, or Singles’ Day, also saw another record sales last year, clocking 268.4 billion yuan ($38.4 billion) in gross merchandise volume.

However, the Chinese e-commerce giant warned that the ongoing coronavirus epidemic could present challenges, in the short-term, to the company’s overall business development. Last month, Alibaba rolled out some 20 measures, including waiving some fees across its online platforms including Tmall, to help affected merchants ride through the epidemic. 

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