Analysis

Ikea's foray into the gig economy

"For those left baffled by the assembly instructions for an Ikea cabinet, help is on the way"

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"For those left baffled by the assembly instructions for an Ikea cabinet, help is on the way," said Zlati Meyer at USA Today. The Swedish furniture giant announced last week that it has acquired TaskRabbit, a San Francisco–based startup that connects consumers with on-demand workers willing to do odd jobs around the house, such as fixing a broken toilet, hanging curtains, or — you guessed it — assembling Ikea furniture. Ikea, which didn't release financial details about the deal, said it hopes to use TaskRabbit's 60,000 freelancers in 40 U.S. cities and London to make it easier for customers to put together its shelves, sofas, and beds. Analysts praised the deal, saying that consumers might now choose Ikea over competitors "solely because the assembly service is practically built-in." This is Ikea's "first foray anywhere near Silicon Valley," said Saabira Chaudhuri and Eliot Brown at The Wall Street Journal. Many large, established companies are "grappling with big changes brought on by digitization," and they are turning to service-oriented tech firms "to help their business grow, or slow their decline."

Ikea isn't the first furniture company to team up with a handyman marketplace this year, said Adam Rogers at Wired​. In May, Wayfair, the world's largest online-only furniture retailer, announced a partnership with Handy, a platform that connects people with repairmen and cleaners, to offer "one-click installation and assembly" at checkout. This "gig-plus" economy has a ton of upsides for big retailers such as Wayfair and Ikea. They "get to charge more for an added service" and access a new set of customers "who want to buy big-ticket items but don't want the hassle of assembly." Plus, they'll have fewer returns, because "people are less likely to send something back once it's built and installed." Being able to rely on gig workers helps the bottom line, too, said Leonid Bershidsky at Bloomberg​. TaskRabbit workers are freelancers, so the company won't have to offer them overtime or "pay for their benefits." Ikea's move is also a bid to hang on to the crucial millennial market. In a recent poll of 2,000 U.S. millennials, 3 in 5 said they "struggle with basic DIY tasks." Ikea understands that message loud and clear: "More and more customers will be put off by the need to assemble furniture, and unless Ikea gets in on the assembly business, it will miss out on revenue."

There's another "not-so-obvious reason" that Ikea wanted an army of handymen, said Sonya Mann at Inc. The retailer conducts extensive ethnographic research — studying people's morning routines and what makes a home feel like a home — and "then shapes its products accordingly." But while Ikea knows a lot about what products people are willing to buy, it doesn't know as much about the services they are willing to pay for. Enter TaskRabbit, whose "huge trove of data" about the domestic jobs people are eager to outsource will help Ikea fill that gap. "There's no market research like going into people's homes and seeing how they live."

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