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Here’s what you should know today.

1. Ikea is mulling 3rd party ecommerce sales

Ikea is mulling selling its ready-to-assemble furniture and home goods online through third parties.

In a statement emailed to Retail Dive, the company stated: “At IKEA we are curious and want to explore new areas and get new insights on how to reach and serve more of the many people. One part of that is that we are open to the idea of piloting and testing making IKEA products accessible through other online platforms than our own.”

The logistical sweet spot may be why the company has been so slow to ecommerce. Former Ikea CEO Peter Agnefjall​ attempted to spin Ikea’s slow migration to digital into a positive, saying last year that its late entry into online commerce could allow more nimble mobile capability from the outset. “We could have been faster, I could agree to that,” Agnefjall told CNBC last year. “But by being late we can skip a step in the technology development, straight to mobile and tablet.

Online furniture sales have emerged as a major growth area in ecommerce, rising 18% in 2015, second only to grocery. Some 15% of the $70 billion U.S. furniture market is now online, according to IBISWorld data.

Read the rest of the story here.

 

2. India’s Supr Daily raises $1.5M to expand its milk and grocery delivery service

The Supr Daily service is designed to bring formality and order to India’s chaotic system of morning milk deliveries.

Government reports suggest that as much as 68 percent of milk is ‘tainted’ as delivery people will water their milk down in order to get more bags and income for their lot. The milk can include additives like detergent, caustic soda, glucose, white paint and refined oil to mask coloration.

 Milk is the main hook for Supr Daily service but customers can also buy every day essentials like bread, eggs, butter and coconut milk to save regular trips to the shops.
Supr Daily started out with limited reach very deliberately to test the viability of its service, and now Kumar and fellow co-founder Shreyas Nagdawane are eyeing expansions. Initially that will be to cover all of Mumbai, and then later into one of India’s other tier-one cities.
Read the rest of the story here.

 

3.  Recommended Reading: Selling stuff is no longer the point of retail stores

That’s the future of retail, according to a new breed of startups that have embraced physical stores as places for “brand experiences” rather than mere sales. Consider Outdoor Voices, an athletic apparel brand that has gained a cultlike following among young, primarily female fitness enthusiasts.

The company’s four stores are home base for gatherings like “dog jogs,” community yoga, and brunch parties. As CEO Tyler Haney explained at the TechCrunch event, its stores “are not about revenue, but community.”

In the middle of it all are the upstarts, among them Glossier, Outdoor Voices, Warby Parker, Harry’s, Bonobos, Rent the Runway, Everlane, and Cuyana.

They are leveraging newly available real estate to experiment with boutiques, showrooms, and pop-up shops. Using physical spaces to build offline community has another advantage: It’s one place where Amazon doesn’t care to compete.

Read the rest of the story here.

Indonesia is projected to capture 52% of Southeast Asia’s total ecommerce value by 2025.

Total revenue from ecommerce in Indonesia only this year is predicted to reach $6.96 billion, and projected to rise to $14.47 billion by 2021, meaning that total revenue will double in four years.

Statista data shows us what businesses looking at the Indonesian market should keep in mind for the next few years.

Fashion is a leading vertical in ecommerce

Fashion consistently dominates as the country’s top selling vertical in online retail and is predicted to increase in revenue every year until 2021.

Fashion 2016: $1.99 billion total revenue

Fashion 2017: $2.47 billion total revenue

Fashion 2021: $5.32 billion total revenue

Current key players in fashion ecommerce:

Matahari Department Store, Salestock, Zalora, Lyke, Berrybenka, muslim fashion store Hijup, and Kuki

Source: eIQ ECOMScape Indonesia

Food and personal care to experience slow growth

The total revenue for online food and personal care in 2016 was $0.49 billion, and predicted to reach $0.71 billion by 2018. By 2021, food and personal care online revenues are projected to reach $1.07 billion, trailing behind verticals such as electronics, fashion and furniture but still expected to double.

Furniture and appliances to experience steady rise

The graph suggests that more Indonesians will be jumping online to buy couches and chairs. A few first movers in the furniture industry such as Fabelio will be a part of the market that is expected to bring in a total revenue of $1.18 billion and  predicted to rise to $2.39 billion by 2021.

Looking ahead

Indonesia’s ecommerce market as a whole is  set to grow.All verticals ranging from fashion to toys are all poised to experience 2X growth by 2021 as internet penetration is going to jump from 13% to 21% by 2021.

The showroom is quiet.

Fanie Fikri, Head of Marketing at Fabelio, one of Indonesia’s up and coming startups, isn’t worried, the usual mall traffic is out to lunch.

“Our experience centers contribute a healthy 15% of our total revenue.”

He’s referring to the number of customers who have “signed in” to any of the company’s two offline experience centers to view Fabelio’s line of Ikea-esque furniture before buying it online.

To promote a product such as furniture, it’s almost mandatory to have an offline presence and it must be working as the company has raised $3.5M in total funding and was a part of SPARK 40 2016 top individuals building the ecommerce ecosystem.

ecommerceIQ invited out Fanie for coffee to discuss how the company markets affordable coffee tables and artisanal items to the masses and the habit of purchasing furniture online.

What was buying furniture like?  

“A complete mess.”

Fanie explains that his father used to find a carpenter on the streets of Jakarta, attempt to describe his coffee table vision and haggle for an agreeable price. He would also need to return a few times in a week to check on its progress because very rarely would it be without blemishes or completed on time.

One could understand the frustrations with buying artisanal furniture in Indonesia and why it was such a big deal when Swedish furniture giant IKEA opened its first store in the archipelago three years back.

It also showed the shift in taste of Indonesians from traditional teak furniture to a more minimalistic and functional design.

Furniture is not dominated by one brand and Ikea only captures 18% market share in Indonesia so why not offer another option online?”  

Startups, do your research.

If a company expects potential visitors to spend at least $250 per order on its website, it would be wise to conduct extensive market research first. Furniture is one of those items that people prefer to have home delivered, but who is the audience?

Unlike IKEA, that focuses on younger people with higher education, medium income, and are not very status conscientious, Fabelio targets new Indonesian families who have the growing luxury of decorating as the average top income earners are 30-34 year olds (Euromonitor: Income and Expenditure Indonesia).

Consumer expenditure in Indonesia on household goods and services is also forecasted to rise in the next 13 years.

The company has held many focus groups comprised of young couples, with and without children, to understand what its consumers are looking for. Fanie, a local Indonesian himself, knows that many young professionals are living in “Koskosan” – temporary rooms that are already fully furnished – so they wouldn’t be Fabelio’s main customers.

The company deduced the following from marketing efforts:

    • Focus groups revealed that Indonesians prefer wooden furniture but the look cannot be too raw, it needs to be extremely well polished. Women typically decide on the household’s smaller purchases but males have the final say on larger purchases.
    • Paid search keywords in Bahasa – “furniture”, “buy furniture online”, “dining room table”, “chairs” – hold the highest marketing return
    • Showrooms “experience centers” are the company’s build trust and inspire, are able to capture names and emails in a visitor log book to track efficacy
    • Event sponsorships are important to reach the right audience, in Fabelio’s case, Indonesia housewives, who still have 78% influence over their spouse’s income. The company partnered with Femina Group, a popular magazine for women, to provide the furniture for its offline pop shop

 

Fabelio partnership with Femina Group’s fashionlink pop shop at Fabelio’s experience center in Senayan City, Jakarta.

What about the Swedish competition?

Although both companies offer minimalistic designs, Fabelio ensures competitive pricing and more room for customization.

Like IKEA, the company also offers “Fabelio Design & Build” that is a B2B interior decorating service. The offices of Go-Jek, Qraved and Singapore Airlines all contain a splash of Fabelio.

Home by Fabeliois the company’s newest venture that caters to customers with basket sizes of 20M IDR and up. If clients are purchasing multiple pieces of furniture, why not send in a professional interior designer for free to transform the entire space?

Although it’s been only 4 months since its launch, over 100 customers have currently signed up for the service.

Furniture may seem as a one-off type of buy but Fabelio sees 20-25% repeat purchases within six months. Fanie also shares other factors that attribute to the company’s success:

    • Extremely vigorous QC process that includes testing weights on the tables, balance of chair legs, polishing uneven colors and surfaces to reduce number of returns (only 10% of returns are due to quality issues)
    • More logistics control with its own dedicated fleet and free delivery and installments in West Java whereas IKEA charges for both. Fun fact: the Fabelio trucks have travelled 120,000km, equivalent to 3X around the globe’s circumference.
    • Having “Ready Stock” items delivered within 4-7 business days and “Made to Order” items delivered within 3 weeks

“We don’t see IKEA as an enemy, they are more of a mentor we can learn from. What we want to know is why our customers who’ve been at IKEA come to Fabelio,” comments Fanie.

Fabelio’s design for its own future

The company hopes to offer delivery to other parts of Indonesia beyond West Java, the country’s largest consumer market, and open more experience centers. The challenge is finding a sweet spot between high foot traffic and rental price.

Fanie shares that although Fabelio plans to expand to new markets, namely Singapore and Malaysia being the most mature and ready for furniture ecommerce, the company wants to cater to Indonesians properly first.

There is already one piece of Fabelio furniture in all 267 neighbourhoods of Jakarta, minus Thousand Islands Regency. Maybe the next coffee table for your new home won’t have to be from Ikea but Fabelio.

The Fabelio team

AUTHOR: CYNTHIA LUO