Ikea tests a secondhand marketplace

The news: Ikea is testing a peer-to-peer secondhand marketplace where consumers can connect to buy and sell pre-owned items made by the Swedish furniture giant, per The Financial Times.

• The marketplace, called Ikea Preowned, will be available in Madrid and Oslo through the end of the year.
• If the test proves successful, the retailer plans to roll out the marketplace globally, which would put it in direct competition with platforms such as eBay and Craigslist.

The strategy: By diving deeper into secondhand offerings, Ikea is bolstering its sustainability bonafides and moving to make inroads with an important segment of consumers. The peer-to-peer program represents the latest step, with the retailer aiming to cut its greenhouse gas emissions in half by FY30 and reach net-zero emissions by FY50.

• The program builds on Ikea’s buyback program that launched in 2022 in which customers can return specific used furniture items in exchange for a store credit. It then resells those items in its “As-Is” department.
• One in five consumers (20%) who made a retail purchase through secondhand channels last year bought furniture, per PYMNTS. That share jumps to 38% among bridge millennials (older millennials and younger members of Generation X) and 34% for millennial shoppers.

One piece of a larger puzzle: Ikea spent the last few years evolving from a retailer that drove the vast majority of sales from massive stores located outside city centers to a dynamic merchant willing and eager to test, learn, and iterate, both offline and online.

• The retailer is in the midst of a $2.2 billion three-year US strategy in which it aims to open eight traditional locations and nine plan-and-order points—a smaller format where shoppers can work with in-store associates and place orders for Ikea products.
• That’s enabling Ikea to expand into areas where it previously had little to no presence. For example, the majority of those new stores will be located in southern states. The retailer also recently announced plans to open a store in the heart of the Fifth Avenue shopping district in Manhattan.
• The retailer’s strategy also includes opening about 900 pick-up locations in a push to remove a friction point that keeps shoppers from buying products online.
• At the same time, Ikea seeks to improve its operations by buying US supply-chain software provider Made4net last year, and earlier this month rolling out a fleet of artificial intelligence-powered drones to assist with inventory management in its warehouses.

Our take: Ikea recognizes that how consumers buy furniture has undergone a fundamental shift since the pandemic.

• We expect 32.8% of US furniture sales to occur online this year, up from 22.3% in pre-pandemic 2019. We expect that shift to continue with ecommerce penetration reaching 39.6% in 2028.
• Ikea’s evolving model should help it find its footing amid the changing landscape.