Everyone knows that the product and price are the core of an enterprise. In addition to the product and price, however, there are many factors that affect costumers’ decision such as distribution channel, logistics and location.
The IKEA story begins in 1926 when founder Ingvar Kamprad is born in Småland in southern Sweden. Ikea is a Swedish company known for its affordable, modern furniture. The company specializes in compact styles, usually assembled by the purchaser at home. With nearly 300 stores worldwide, the store has gained a faithful following of budget-hunting customers, and even entered pop culture.
“To create a better everyday life for the many people”, this is the IKEA vision. IKEA’s business idea is “to offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them”.
Good distribution channel ensure costumer obtain accurate product in time, therefore it will maximize costumer satisfaction. Normally, there are three kinds of distribution channels: intensive distribution, selective distribution and exclusive distribution. Different distribution channel suit for different product. For example, intensive distribution usually for simple, inexpensive, easily transported products, e.g., snack food. Selective distribution usually for complex and/or expensive products that require assistance, e.g., most cars, appliances, etc. Exclusive distribution usually for extremely selective product such as Rolex.
About IKEA, considered it sells furniture and family products, its distribution channel belongs to selective distribution. Trucks, boats and trains are all needed to move products around. Coordinating these different means of transport to make the movement of goods as quick and efficient as possible is a real art! And it’s not enough just to make sure the goods arrive at the right stores and customers at the right time; they must also arrive in good shape, ready to be sold at the lowest possible price.
In addition to superior distribution channel, IKEA’s logistics system also perform well. In the phase before the products reach the store, IKEA distribution service makes sure all goods are transported from suppliers to stores. However, once in the stores, logistics handles the off-loading and arrangement of goods.
At IKEA, thousands of products are handled daily. The movement of goods must be as efficient as possible, under all circumstances, guaranteeing service to customers and ensuring that the products they seek are available to buy at all times. Jobs in logistics account for about 20 -25% of each store’s co-workers, all of whom provide a vital link in operations. The goal is to be in full control of the space and the volumes of goods in order to maintain uninterrupted sales.
How to select a suitable location?
As the world’s largest supplier of home, Ikea and other top international retails have a very scientific and rigorous location selection program, according to the regional characteristics of the geographical environment, considering the allocation of resources, market potential, transportation factor conditions, topography, environmental impact, etc., to choose the best location in particular region.
In IKEA headquarters, it has been using PBBI location intelligence technology assisted site decisions. Compared with the traditional site selection methods, the advantages of location intelligence technology is that it will make different sources, types of large amounts of data together to provide spatial analysis, which other traditional analytical methods do not have. Location intelligence technology can provide customer information and comprehensive analysis of census data to dynamically display the level of market penetration, market share and sales area information on a map.
Equally important, IKEA has perfect technology support for its customers. Customers can download IKEA app or visit IKEA website to search nearby store, the prefer product, finish purchase behavior and even ask a delivery service. Furthermore, customers can see self-service technologies everywhere in IKEA store, it both save time de human resource through customers undertake service activities themselves, without the direct assistance of service personnel, using facilities provided by the service provider.
The next video will show an automated Ikea distribution center, it is very efficient and impressive.
By kennyfang (214267189)
IKEA 2015, IKEA history – how it all began, IKEA, retrieved 13 May 2016, <http://www.ikea.com/ms/en_AU/about_ikea/the_ikea_way/history/>
IKEA 2014, Vision and business idea, IKEA, retrieved 13 May 2016, <http://www.ikea.com/ms/en_JP/about-the-ikea-group/company-information/>
IKEA 2010, Distribution/warehouse, IKEA, retrieved 14 May 2016, <http://www.ikea.com/ms/en_US/jobs/business_types/distribution_logistics/>
IKEA 2010, Logistics, IKEA, retrieved 15 May 2016, <http://www.ikea.com/ms/en_US/jobs/business_types/stores_retail/logistics.html>
WiseGEEK 2016, What is Ikea?, WiseGEEK, retrieved 13 May 2016, <http://www.wisegeek.com/what-is-ikea.htm>
Youtube 2015, Ikea Distribution Center, Youtube, retrieved 15 May 2016, <https://www.youtube.com/watch?v=gLOma_xVLfs>