Photo: TaskRabbit
IKEA buys TaskRabbit to give consumers relief with furniture assembly
Marking its first investment in the on-demand space, IKEA agreed to acquire the popular gig-economy startup, TaskRabbit.
TaskRabbit, based in San Francisco, matches customers with “taskers” who can complete tasks such as housecleaning, plumbing, home repairs, errands, moving — and perhaps lending a hand with hard-to-assemble furniture manufactured by a certain Swedish retailer. Workers list their hourly rates for their services and TaskRabbit uses an algorithm to suggest candidates for each “gig.” It has 60 full-time employees, 60,000 Taskers and recently expanded to 40 cities around the U.S. and in London.
Operating as an independent company within the IKEA Group, TaskRabbit will continue its collaborations with other retailers, including one it already has with Amazon, as well as with commercial partners.
In late 2016, TaskRabbit began providing furniture assembly services for IKEA’s London stores. The acquisition promises to further those services. Terms weren’t disclosed.
“In a fast changing retail environment, we continuously strive to develop new and improved products and services to make our customers’ lives a little bit easier. Entering the on-demand, sharing economy enables us to support that,” said Jesper Brodin, president and CEO of IKEA Group, in a statement. “We will be able to learn from TaskRabbit’s digital expertise, while also providing IKEA customers additional ways to access flexible and affordable service solutions to meet the needs of today’s customer.”
TaskRabbit’s competitors include Amazon Home Services, Handy, Thumbtack, Porch and pro.com. For IKEA’s customers, TaskRabbitt may provide in-home installations and repair services similar to Best Buy’s Geek Squad and Sears’ Home Services and Innovel Solutions divisions.
Added Mr. Brodin, “As urbanization and digital transformation continue to challenge retail concepts we need to develop the business faster and in a more flexible way. An acquisition of TaskRabbit would be an exciting leap in this transformation and allows us to move forward with an even greater focus on innovation and development to meet changing customer needs.”
Discussion Questions
DISCUSSION QUESTIONS: What do you see IKEA gaining from its acquisition of TaskRabbit? Do you other ways retailers can take advantage of the sharing economy?
Poll
BrainTrust
Adam Silverman
SVP Marketing, Theatro
Adam Silverman
SVP Marketing, Theatro
IKEA realizes that busy consumers truly value convenience and offering their customers a convenient service to purchase, deliver and assemble furniture is a way to make their lives easier. Consumers that don’t want to deal with the hassle of assembling furniture were probably previously reluctant to purchase unassembled items from IKEA. This value-added service will expand IKEA’s target audience to broader demographics.
TaskRabbit’s customer base includes people that don’t have the time or skills to do manual labor projects themselves. These demographics are prime candidates to expand IKEA’s customer base, as these individuals aren’t inclined to shop for do-it-yourself products. Now they can benefit from IKEA’s unique designs, at value prices, without having to worry about assembling the furniture themselves.
Other home furnishing retailers that sell unassembled furniture may likely follow the leader and offer similar assembly services or look to partner with third-party companies to offer this service.
One of the biggest pain points for IKEA customers has now been addressed. Consumers love IKEA design and pricing, but hate the DIY assembly. Best Buy realized a similar phenomenon with consumer electronics and started the Geek Squad, which has worked out very well. Smart move by IKEA.
Max, you took the words out of my mouth verbatim. The only other thing I will add is that I wonder what additional services IKEA could expand into now that they have a mobile workforce (old furniture removal service anyone?).
Absolutely a smart move for IKEA. My question is, will the TaskRabbit assembly be baked into IKEA’s pricing or remain a separate charge? Will IKEA customers receive a deal for using TaskRabbit? If IKEA solves for delivery in urban areas, they’ll further add value and reduce the pain for consumers.
Some retailers in the home space are afraid to invest in services because they can’t absorb the costs of unused labor. But for IKEA the model works well, given the built-in need for product assembly. The upside here is that TaskRabbit is already a built and operational network and IKEA can “fill-up” some of the gaps in work load. Good match here.
I think this is a brilliant move by IKEA. As a purveyors of all things in the home, acquiring a service like TaskRabbit enables IKEA to not only provide obvious services like delivery and assembly, but extend to new services that can further support purchases. Unlike many acquisitions that seem strategically dubious, the acquisition of TaskRabbit by IKEA is strategically sound with obvious benefits and potential value.
It’s a super-smart move by IKEA. They’re solving a pain point we’re all familiar with and there’s opportunity to grow into new areas as well. This is on the heels of the launch of their Place AR app; IKEA certainly seems comfortable leveraging technology to dramatically improve the customer experience and it makes all the difference.
I think this is one of the most brilliant acquisitions that will provide real value to IKEA shoppers. This is a perfect example of understanding your customer and their frustrations. Customers love IKEA but hate putting the products together. Offering this service at the point of purchase will add volume to TaskRabbit and provide a valuable service to the user.
Fashion and electronics retailers should use the gig economy to provide styling services, personal shoppers and installation services for purchases. These would be more “on demand” services allowing the retailers to provide the solution without adding to the overhead.
DIY retailers like Lowe’s and Home Depot have been using networks of installers for a long time. For all those who have struggled to tighten all the fasteners and lift the furniture in place this is a huge value-add solution that differentiates IKEA.
Like Best Buy’s purchase of the Geek Squad, IKEA seems wise in creating a first mover solution in ready-to-assemble furniture with the ability to exercise quality control via ownership. The future of retail goes well beyond selling products. It is all about providing choice and solutions that consumers value. From assembling furniture to diversifying for smart home solutions, TaskRabbit has legs to run in the profitable services business.
The primary benefits are threefold. First, it extends the value proposition of IKEA and broadens the base of potential customers who typically would not shop at IKEA (this is Ken Morris’ point above). Second, it adds incremental sales to existing customers who don’t have the time to go to the store, purchase, transport and install an IKEA product. Buying on their site often requires a hefty shipping charge and slow delivery times — it’s clear IKEA wants you to buy from stores (their model is dependent on it). And third, it gives IKEA insight into other products and services that their customers may need. It will extend share of wallet and drive long-term growth for the organization.
The TaskRabbit acquisition should not be seen as a profit center, but rather a utility to help the core IKEA business grow and expand.
TaskRabbit provides IKEA with an opportunity to offer customers additional services, mostly assembly, should they want them. I don’t see this as a big win but it will bring some success. Part of the IKEA experience has always been buying furniture that is fun including putting it together yourself. Some customers may want to hire TaskRabbit for convenience, but I don’t see that being a large market. Also, some customers may take advantage of other services TaskRabbit provides. It is good for TaskRabbit to be affiliated with IKEA because that will help them build brand awareness. So overall this is a good move, but I wouldn’t look for it to be a huge money maker for either company.
I find this move to be risky for IKEA. These “gig economy” firms such as TaskRabbit and Uber are not profitable or even forecasted to sustain — they were service commodities at best. So this was a fire sale. Furthermore, IKEA/TaskRabbit appears to be a generic implementation of Sears/Home Depot/Lowe’s contractor installation services. Except Sears, Home Depot and Lowe’s contractors are trained experts and carry insurance whereas TaskRabbit gig workers are not trained, experienced or most cases insured. This look like a cheap contractor service buy that is going to be a big liability cost to IKEA later.
IKEA’s big thing is self-service. Go to the store, pull your product, take it home and put it together yourself. Or maybe have it delivered and put it together yourself. Or have it delivered and have someone put it together for you. So many choices! (Really, only three.) That’s what consumers love — the freedom of choice. IKEA is positioned as a low-cost, self-service furniture solution. Yet they recognize the customers they could lose with that model, and they have responded to them. In a big way they say, “We want you!” and as a result arrange for delivery and setup. And now they just bought the company that does the setup. I’d say that’s a pretty bold, customer-focused statement. Kudos for IKEA!
This move helps IKEA extend the brand in a very organic way and gets the brand closer to people’s lives. It can also help some shoppers overcome the (perceived) barrier to entry for the brand and thus increase sales. For TaskRabbit, it provides significant brand endorsement which can lead to greater business.
There’s the chance this is purely a corporate acquisition hoping to expand the parent corporation portfolio.
But let’s assume not. With TaskRabbit in place, IKEA designers can choose to step into the territory of luxury furnishings.
That said, this move also seems to do serious harm to IKEA’s fundamental operation — inexpensive, assemble-it-yourself, clever cheap designs. Adding TaskRabbit on top of that takes away two core reasons to exist.
Personally, I’m concerned. If society can no longer even assemble furniture from IKEA, are we stepping into the spaceship future seen in the movie Wall-E?
Regular readers of this forum know (and often criticize) me for being so negative about retailers. But this is pure brilliance on the part of IKEA. So clever, so sensible and I bet it will be so successful!
FRICTIONLESS is the mandate in retail these days, and the TaskRabbit acquisition brings that to IKEA. Nice move.
IKEA’s stylish, low-price proposition is very popular. But the deal has always been that the low-prices come with some pain-points — one of which is assembly. This service helps to ease that pain, and does so in a way that has minimal capital costs for IKEA. True, IKEA will never be a “white glove” type of retailer, but this adds a solid level of service which will likely attract new customers.
Brilliant. Think Geek Squad for furniture. What’s not to like? Way to close the loop, IKEA, I think I’ll start to shop there again.
IKEA always needed their own installers. Who says these TaskRabbits can put the IKEA stuff together? Our handyman threatened my mom not to buy another thing for him to build from IKEA as they are like a 1,000 piece puzzle. He uses like 50 curse words every time he has to build something. He said, you need to go to IKEA College to learn how to put this stuff together. So hopefully the TaskRabbits are going to IKEA University before they get to your house.
Good luck, I wouldn’t have bought TaskRabbit if I were IKEA. We can just hire a handyman off of craigslist, etc, that specializes in putting IKEA stuff together. Just sayin’.
This seems like a natural acquisition to me. Like Best Buy has its Geek Squad, IKEA will now be able to offer set-up services directly linked to its stores or online. Maybe they could include set up for a flat fee based on the number of items a shopper buys. There are limitless possibilities for the future of this collaboration. As Amazon experiments with home related services, this gives IKEA a leg-up, since TaskRabbit is already a known and trusted source for help around the house.
There are two items:
a. If you’ve done it before, you can do it again much quicker.
b. If you’ve done it before and you pick an unforgiving piece, you many never buy from IKEA again.
Item “a” speaks to what TaskRabbit will be able to achieve (thankfully).
Item “b” speaks to what TR will/may prevent (and I wonder how many people fall in this category).
Regarding item b, have you ever tried to make the IKEA Galant File Drawer? I am a pretty good kit builder and, back in the days of HeathKit, I built everything, including their huge color television, so understand where I’m coming from. The point: When I went back to IKEA to buy a drawer liner (an obvious cross sell that was not offered to me), I brought it up with the salesperson in the department and he looked at me with respect, no words, just respect. As with all traumatic experiences, I shared my thoughts relating to one of the steps that showed no mercy if you failed to follow their hieroglyphics to the letter. So good move IKEA, and a final thought: there needs to be an IKEA Olympics — perhaps sponsored and presented on Netflix or Hulu — and if there is such a thing, I propose a category for the Galant.