Why IKEA Loves Packaging & Hates Air
June 30, 2015
If there’s one thing that IKEA is known for, it’s delicious Swedish meatballs. If there’s a second, it’s selling cool furniture that’s available on a budget.
(Also, did we mention the meatballs?)
In order to maintain the “affordable” and “on a budget” parts of its reputation, they have been obsessive about the weight and packaging of its products.
“We are engineering costs out of our value chain that don’t contribute anything,” Chief Executive Peter Agnefjäll recently told the Wall Street Journal.
The Swedish retailer is so concerned with minimizing its shipping costs that it has actually changed the design of many of products for cheaper shipping. When you walk through an IKEA, you’ll notice that nearly every item is packed completely flat. This is not an accident.
“We hate air” is a common mantra at IKEA. They have little tolerance for paying for unused space in its packages.
The Ektorp sofa exemplifies this; it used to ship as a single piece. In 2012, IKEA changed the design to be broken down into a flat package. This resulted in a 50% reduction in the size of the Ektorp package. IKEA was then able to drop the price of the sofa by 14% without cutting into its profits!
They acknowledge that this often requires more assembly by customers. However, IKEA believes that people come to them largely because they are affordable. Putting in a little extra work is worth a smaller price tag.
Are you doing enough to minimize your shipping and packaging costs? At Ernest, we help our clients find strategic, innovative packaging solutions that maximize efficiency. For example, have you seen our DIM weight iPhone app, which gives you the information you need to make more-informed shipping decisions?
Are you current packaging solutions full of hot air? Contact us today about ways to cut your costs. In the meantime, go find some of those Swedish meatballs!
Photo Credit: IKEA.com
