A Slate article asks a very simple question: “Ikea is so good at so many things. Why is it so bad at delivery?”
The author tells the story of an item that was purchased from Ikea and was supposed to be delivered by a third party. While Ikea claimed to ship the item, the third party claimed to never receive it. Since Ikea claimed the item was shipped, the order could not be cancelled without incurring a hefty cost. Apparently, this is not a unique experience:
The nightmare of Ikea delivery is a truth so universally acknowledged that even the company cops to it. Chief marketing officer Leontyne Green talked about her own “very frustrating” Ikea delivery experience in a December 2011 Ad Age profile, which stressed the firm’s ongoing efforts to improve delivery and overall customer service.
In trying to explain the above conundrum, the author recruits several of our colleagues from Dartmouth and Harvard:
“With sporadic orders over a wide geographic area, Ikea would need a fleet of trucks that might be idle one day and not able to handle the load the next,” says Robert Shumsky, a professor of operations management at the Tuck School of Business at Dartmouth.
We have discussed several times, albeit in the context of grocery delivery, the fact that one of the main cost drivers of delivery services is density. Since Ikea tends to be quite far from urban and dense areas, it is usually difficult to build density and thus difficult to offer a cost efficient services. One may charge a high price for such a service, but given their target market, this may not be ideal.
According to Santiago Gallino, also a professor at the Tuck School, “Ikea’s target customers are consumers who prize ‘value,’ and are willing to spend their own time to save money”—by pulling items from the warehouse, assembling the items themselves, etc. “Asking the customer to spend time to come to the store is consistent with this segmentation strategy,” Gallino says.
But ultimately, it comes down to focus:
Ikea refuses to expose itself to the idiosyncracies of its customers,” [Frances] Frei says. “There is no way they could do their own delivery with that signature Ikea crisp efficiency—there are too many variables. So they make you conform to them.” Ikea makes great stuff cheap—and that is the draw.
As the authors put it, this is a case study in how a large retailer can succeed by failing. This is the essence of focus. Ikea focuses on cost and the a big part of it is also educating your customers that delivery is not the preferred option to purchase its products and that customer service is not something you should expect. Since this allows the firm to reduce its cost even further (potentially), it is the “definition” of focus: doing something poorly and using it to do something even better.