From the Web to the Living Room
How can IKEA in South Korea use e-commerce strategies to ensure that their young consumers’
brand loyalty is as stable as their furniture?
Digital Strategy
Chanwu Oh
Professor: Sungsu Kim
Fall Semester 2022
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Table of Contents
1. Introduction
Page 3
2. Market Research
Page 4
3. Interview/Survey Summary
Page 8
4. Interview/Survey Analysis and Recommendations
Page 11
5. Conclusion
Page 13
6. References
Page 14
7. Appendix
Page 15
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Introduction
IKEA is a whale in the worldwide furniture industry. Its focus on affordability without
sacrificing quality has made it a staple in the interiors of countless households in countless
countries. Consequently, its entrance into the Korean furniture and living products industries has
not gone unnoticed and has even been met with an atmosphere of crisis amongst other home
products giants in the peninsular nation such as Hanssem, Hyundai Livart, Casamia, and Market
B. IKEA presents a unique threat to these corporations as, instead of focusing on high-end
furniture sales, it has adopted an entirely new approach: focusing on the various lifestyles of its
customers’ demographics and the affordability of its products.
This does not mean that its dominance is inevitable, however. If IKEA fails to adapt to
Korean consumer preferences, especially in the e-commerce sphere, its future will be bleak
indeed. This paper aims to provide ideas that will increase IKEA’s e-commerce competitiveness
relative to other home products giants in South Korea such as Hanssem, Hyundai Livart,
Casamia, and Market B, thereby giving the worldwide furniture giant the blueprint to continued
success in the Korean market.
This paper will do this by aggregating data from three different sources. First, the
consumer preferences and habits of Koreans will be observed, and an example of what not to do
as a foreign company looking to expand into Korea will be shown in the market research
segment. Then, the quantitative data and qualitative data gathered from interviews and a survey
will be shown and analyzed. Using these data points, an overall analysis of the online furniture
market in South Korea will be given, and recommendations specific to IKEA will be made on
what initiatives it can take to increase its brand’s and its products’ attractiveness towards young
online shoppers in Korea.
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Market Research
According to Dr. Mikko Hannien, a researcher in the Aalto University School of
Business Department of Marketing, South Koreans are becoming increasingly less attracted to
domestic products and purchasing more foreign products, particularly from foreign e-commerce
sites. Concurrently, Koreans are becoming increasingly price-conscious due to the economic
slowdown and the high level of debt caused by COVID-19. These two factors provide a unique
opportunity for IKEA to gain more market share as it is a company foreign to Koreans that
emphasizes the value of its products relative to their prices.
Regardless, there is still a unique set of challenges associated with the entry of a foreign
company into South Korean markets, and even whales are susceptible to failure if they do not
adapt to the local consumer patterns and preferences of Koreans; a case in point is Walmart’s
defeat at the hands of Korean companies such as E-mart and Shinsegae, resulting in the megaretailer’s retreat from Korea in 2006. (Gandolfini, 2008) Granted, IKEA has had much more
success in South Korea than Walmart had, but the company’s online growth has been
decelerating: IKEA online sales in Korea rose 12% in 2022 as opposed to 34% in 2021.
E-commerce is growing in importance by the year. As our wi-fi and smartphones get
faster and faster, more and more people are relying on the internet to purchase not only daily
necessities but also more permanent fixtures such as tables, chairs, washing machines,
refrigerators, and the like. People between the ages of 20-29 and 30-39 are the most avid users of
online shopping services, 97.9% and 97.1% frequenting the platforms, respectively. As a result,
the victors of the battles for brand presence in Korean online platforms and social networking
services will win the loyalty of young Koreans that will be buying furniture for many decades to
come.
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It is also well-known that South Koreans place much importance on delivery times. With
the advent of the COVID-19 pandemic, the popularity of fast delivery services such as
Coupang’s Rocket Delivery service has skyrocketed. Since then, Koreans have started to view
on-the-day delivery services as a necessity rather than a luxury. Granted, some leeway can be
given in the case of large furniture products such as beds and tables; however, the fact still
remains that the delivery period is a critical factor in determining purchase decisions with large
purchases of large products as well. Korean customers will inevitably view a product that will be
delivered in a couple of days more favorably than one that will be delivered in a couple of
weeks.
Online customer support is another often-overlooked factor when it comes to foreign
companies that seek to enter the Korean market. Korea, especially in Seoul, is a country where
time is not as large of a factor as it is in other countries. Koreans are shopping online no matter
what time it is, and they are looking for good customer service no matter what time it is. In fact,
it is during the evening between 8 PM and 9 PM when consumers are most wont to purchase
products online and call customer service centers, and sales only start dropping off after 10 PM.
(Charlton, 2020)
South Koreans are very conscious of the customer service quality of brands, and online
retail platforms that have succeeded, such as Coupang, tend to display exemplary customer
service from their online platform and their call center 24/7. This is not a phenomenon that has
popped up recently: Koreans have been brand-conscious regarding the quality of service for a
long time. This is one of the reasons why Walmart did not succeed in Korea; Koreans purchase
products not only because of the product itself or the price but also because of the appearance of
the service the customer receives in the store. In Walmart’s case, Korean shoppers did not enjoy
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the warehouse-like atmosphere of Walmart, which American shoppers did not mind due to the
cheap prices.
The reason Walmart’s case is relevant to the matter at hand is that Walmart’s location,
the friendliness and helpfulness of its staff, and the interior design of its stores were all factors
that affected its brand image among South Koreans despite not being directly related to the
products themselves. In the case of IKEA’s online presence, the design of its website, the
convenience of purchasing its products, and the friendliness and helpfulness of IKEA’s call
centers and online chatbots are similarly all factors that affect the brand image of IKEA.
There is one aspect of convenience inherent to many South Korean furniture companies
such as Hanssem that, if implemented by IKEA, could damage the company’s brand identity and
harm its ability to compete effectively in Korea, however: this would the self-assembly
component of IKEA furniture that has become a staple of IKEA products. Instead of catering to
the Korean preference for convenience in this case, IKEA would be well-advised to subtly
advertise the satisfaction inherent with assembling one’s own furniture. Furthermore, it is worth
noting that some customers will need help on figuring out how to properly assemble their
furniture. Videos attached to the product descriptions detailing the assembly process and
comprehensive online customer support could help in this regard. By implementing these
measures, IKEA can turn what would be considered a weakness into a strength that makes its
company unique in the furniture market.
Considering that South Korean consumers have high expectations and are more
connected to the web than the vast majority of other nations, online reviews, especially negative
ones, have a huge effect on the consumer perceptions of a company’s brand image. This is why it
is doubly important that IKEA makes sure its products are safe and easy to assemble, with
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consumers being able to get as much help as they need from online sources such as tutorials and
customer support. Furthermore, IKEA should take steps to ensure that its corporate practices are
environmentally sustainable and its working conditions are acceptable enough to prevent
company scandals from erupting in South Korean media. Due to the interconnectedness of
Korean society, such events can tarnish a company’s image and impact its sales even more
severely than incidents that have occurred in other nations.
With all these factors in mind, IKEA has done well to target 1 to 2 people households and
families with young children. Data shows that rapidly increasing numbers of South Koreans in
their 20s are choosing to live alone: the number has increased from approximately 887,000 to
1,267,000 from 2015 to 2020. (Lee, 2021) This has resulted in more young adults purchasing
furniture, focusing on price and practicality over style and quality. These young adults would
also purchase their furniture online, meaning that they would take convenience and accessibility
into account.
In order to vindicate the data derived from this market research and more precisely
determine what factors are the most important when looking to attract young online shoppers in
Korea, interviews were conducted with ten participants being asked four questions each. The
responses are qualitative in nature, so a survey was also conducted in order to gain quantitative
data for a more diverse data set. A summary of the data will be provided in the following pages,
and the data along with the market research shown above will be used in order to provide
recommendations to IKEA regarding what measures it can take going forward to make itself
more attractive to the generations of Koreans that will be buying furniture for many decades to
come.
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Interview/Survey Summary
In this study, both qualitative data in the form of interview question responses and
quantitative data in the form of a survey were done. The interview questions were as follows:
1. What triggers college student consumers to visit offline stores more often?
2. What triggers college student consumers to visit online malls more often?
3. What market areas and segments do college student consumers think IKEA should do
better?
4. What do college student customers think about the sustainability of IKEA?
For the first question, the participants seemed to be mainly concerned with being able to
judge the quality of the product with their own eyes and compare it with other similar products.
Other concerns included being able to purchase exclusive products only found in brick-andmortar shops, the social aspect of offline shopping (customer service and/or going with other
people), and visiting other attractions in the area.
For the second question, the interviewees’ main reason for shopping online was the
convenience and time-saving aspect of it. The second main reason was that online shopping
allows customers to compare and find better prices more easily. The third reason mentioned was
the wealth of options usually present in online stores.
For the third question, responses were more varied. One response recommended that IKEA
invest more in accessible furniture for disabled people. Another mentioned that IKEA could do a
better job in emphasizing its cheap prices in its marketing. This opinion was vindicated by two
other responses saying that IKEA is too expensive, these responders may not have responded as
such if they had been exposed to advertisements emphasizing the value of IKEA products. The
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need for IKEA to improve its online presence was also mentioned, and further expansion into the
college students’ market was also recommended.
For the last question, four out of the ten participants did not know much about the
sustainability of IKEA. This could be mentioned as an area of improvement, but it is apparent
that part of IKEA’s philosophy is to remain subtle about their sustainability efforts so as to not
turn them into a PR campaign. Despite this, five out of the ten participants did have positive
views regarding IKEA’s sustainability, meaning that IKEA’s brand image is quite positive with
college students in Korea.
The survey results were quite revealing as well. As this data is quantitative in nature, the
results will be posted directly in this summary. Eighteen people responded in total, and there
were four questions in the survey. For further clarification as the data for the second, third, and
fourth questions are in percentages, the numbers of “yes” answers were 8, 14, and 14, and the
numbers of “no” answers were 10, 4, and 4, respectively. The results are as follows:
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Interview/Survey Analysis and Recommendations
To start with, it is significant that both the qualitative data from the interview and the
quantitative data from the survey indicate that convenience is the most important factor that
makes online shopping a widely used service in the 21st century. This has already been made
clear, however, by the market research done in this study.
Consequently, the most important finding from the data procured here would be the
labeling of “product information” as the second most important aspect of online shopping in
question number one of the survey. Thanks to the qualitative data found in the interview
responses, we can surmise that the reason college students in Korea place such importance on
product information is the same reason that these students sometimes prefer to shop offline:
visiting brick-and-mortar shops and inspecting products with their own eyes allows one to be
sure of the quality of a product before purchasing it.
These findings present a unique opportunity to kill four birds with one stone. In this case,
the stone would be the recommendation made in the market research section regarding product
assembly tutorial videos (see page six). Such videos would make the assembly process more
convenient and appealing for would-be customers of IKEA furniture; product assembly should
be fun and satisfying for the consumers, not tedious and frustrating. Some consumers may be
less skilled at assembly and have a harder time understanding the assembly instructions given
with IKEA products. Videos would help immensely in making the process more convenient and
enjoyable for those who need extra help.
At the same time, IKEA could also add segments to the ends of their assembly tutorials
displaying the finished product’s design, its unique features, and its sturdiness. Consumers are
less likely to be skeptical of video footage of a product as video footage is much more difficult to
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edit when compared to photographs, and demonstrating the sturdiness of a product is much more
effective than making claims through writing (although that should be done as well). This way,
the concern most online shoppers have of “buying the wrong product” will not apply to IKEA
products.
These video tutorials would also have the added benefit of ensuring that online shoppers
are assembling their IKEA furniture properly, preventing accidents from happening during
assembly and from the use of misassembled furniture. Finally, making such videos shows that
IKEA cares for its customers. This sets the groundwork for customers looking favorably on
IKEA and takes care of the customer service aspect of online shopping: while this aspect may
not have been as prominently featured in the survey results, the market research and Walmart’s
example show that this is still one of the most important determining factors of a foreign
company’s success in Korea. All in all, the monetary and labor costs of making video tutorials
for each product will be worth it for the aforementioned four reasons.
Another recommendation IKEA would do well to consider is to enter the digital
marketplaces that have already been created and grown by Korean tech companies such as
Coupang and Naver Smartstore. As the market research, interview responses, and survey results
in this paper have shown, convenience is the most important determining factor on whether
young adults in Korea will have a satisfactory experience shopping online for a product or not.
Most Korean college students already have the Coupang app installed on their smartphones, and
most of them also visit Naver’s website every day. Just as an American student may search for
products he/she intends to buy on Google or Amazon, Korean students do the same but with
Coupang and Naver. Integrating itself seamlessly into the digital patterns of young Koreans is
what IKEA must do to make buying its own products more convenient for young Koreans.
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Conclusion
In conclusion, IKEA should tailor its online presence in Korea to the needs and
preferences of Korean consumers while maintaining its identity of lifestyle-focused value
furniture that sets it apart from other living products companies. It has already been doing a good
job of maintaining a brand image that suggests sustainability, quality, and affordable pricing.
IKEA’s online sales growth has been slowing down, however, and it must take measures to
accelerate its online market share if it is to gain the loyalty of young Koreans and survive in the
Korean furniture market.
The market research has shown that young Koreans are more independent now than ever
before, and they are consequently likely to be more avid purchasers of furniture than their
previous generations. IKEA has a unique opportunity here as Koreans tend to look more
favorably upon Korean brands, and Koreans are now more price-conscious as a result of the
COVID-19 pandemic and recent recession. Koreans place a large amount of importance on the
customer service quality of brands, and speed of product delivery is very important to Koreans
when they are online shopping. Most important of all in online shopping is convenience,
however, and the amount of product information available to online shoppers is the second most
important factor.
In order to gain an advantage in these two categories, IKEA would be well-advised to
create video tutorials for the assembly process of its lifestyle furniture while also displaying the
design, quality, and functionality of its products in the videos. It is also recommended that IKEA
integrate its online sales into well-established Korean online shopping platforms such as
Coupang and Naver Smartstore.
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References
Charlton, G. (2020, February 27). What are the peak times for online shopping? The Drum.
Retrieved December 1, 2022, from https://www.thedrum.com/opinion/2020/02/27/whatare-the-peak-times-online-shopping
Gandolfi, F., Braun, M., Nanney, P., & Yoon, K. J. (2008, April). Colossal Failure: Why
Walmart Did Not Succeed in South Korea. Virginia Beach; Regent Global Business
Review
Hänninen, M. (2020, December 6). South Korea - businessfinland.fi. South Korea: A frontrunner
in e-commerce. Retrieved December 7, 2022, from
https://www.businessfinland.fi/49f3ab/globalassets/food/south-korea-mh-v1.pdf
Kim, B. G. (2018, December 30). An exploratory analysis on strategic changes of furniture
retailer: Focusing on IKEA and Hanssem in Korea. Journal of Distribution Science.
Retrieved December 6, 2022, from
https://koreascience.kr/article/JAKO201816357066013.view?orgId=kodisa
Lee, H. J. (2021, November 17). More young Koreans choose to leave the nest. KoreaTimes.
Retrieved December 1, 2022, from
https://www.koreatimes.co.kr/www/culture/2022/11/135_318887.html
Lee, T. H. (2022, September 14). Ikea Korea reports 10 percent drop in sales on year as Interior
Design Boom ends. KoreaJoongAngDaily. Retrieved December 4, 2022, from
https://koreajoongangdaily.joins.com/2022/09/14/business/industry/Korea-IKEAfurniture/20220914154554519.html
Appendix
Research Plan
Item
Week 1
Week 2
Market Research
Interview 1
Interview 2
Interview 3
Interview 4
Midterm Report
Interview Questions
5. What triggers college student consumers to visit offline stores more often?
6. What triggers college student consumers to visit online malls more often?
7. What market areas and segments do college student consumers think IKEA should do
better?
8. What do college student customers think about the sustainability of IKEA?
Interview Answers
Rodin
1. exclusive items only to be found in the brick-and-mortar shops/events held at brick-andmortar shops
2. convenience, not necessarily any particular trigger. online shopping is just easier.
3. I think globally IKEA has done a great job to cut costs and turn furniture into something
easy to access and buy. One area they could do better in is accessibility, furniture design
with accessibility in mind would give them an even better appeal as they could carve into
that area of the furniture market too.
4. IKEA has always done a decent job at sustainability. One thing I really like about their
efforts is that they do not leverage carbon offsets and want to independently become
circular and environmentally positive
Roy
1. The fact that the size of an material should be determined from bare eye
2. Who has no time to go to store and get materials
3. The fact all furniture could be bought cheaper price with variety of design
4. Actually great due to longevity of the product you buy
Mink
1. The quality of the product can be tested in offline stores so that the costumers can
compare.
2. Less time consuming, and easy access.
3. IKEA can do better on their on emphasizing on the affordable price range of their
furniture in marketing.
4. IKEA’s products are relatively long lasting and they do promote sustainability
Josh Choi
1. I want to check out the product itself and it's also a social experience
2. When i want better prices and when i want a specific product.
3. I dont use korean ikea cuz its expensive, so for Korea cheaper products
4. Hmm i don't know about that. No opinion i guess?
Josh Jeong
1. If there are other attractions in the area, (food, cafe) or if physical examination aids
decision to purchase
2. sales, trendy, reliable quality products.
3. affordable, compact products that aid storage or spatial optimization to target young
consumers who live in one rooms or studios
4. Not much exposure to information to give opinion on this matter.
Dabin
1. discrepancy between pictures and the real thing
2. discounts, fast delivery
3. better product quality
4. have no clue
Scott
1. On demand customer service and first-hand 맛보기
2. Convenience, lower price, access to reviews
3. Price
4. Not sure
Junahn
1. I think college student consumers visit offline stores when they are uncertain about the
size or if there are any events being held (for ex. launching limited editions)
2. Online malls are more convenient for college students because it is less time consuming.
You can view all of the products and easily find what you are looking for. In offline
stores it is really difficult to find what you are looking for in a short amount of time.
Online malls also sell many products that offline store don’t sell. You have a wider range
of choice in online malls because their storage amount is unlimited while offline stores
usually tend to only display recently launched products.
3. I think IKEA is actually doing good in all market areas and segments. They sell almost
everything and it is accessible to a lot of people as most of their products are affordable
for low-income consumers as well. IKEA sells what we need no matter what our
nationality, age, culture, and taste is which is probably why IKEA is the first place people
visit when they get a new house.
4. I am very positive about the sustainability of IKEA because I am aware that the company
is actively setting sustainability targets and they are managing the whole value chain to
reduce their negative impact on climate change.
Sangsu
1. Going with someone else.
2. Convenience
3. Better Online shopping included
4. Low profit margins, but loyal customer base. Similar to Costco, but not as profitable due
to the limited products it offers
Minjun
1. Ability to see item and quality first hand
2. Different shopping deals such as holiday sales as well as ease of access logistically
3. Broadening the target demographics to include more youthful generations by providing
ready for school merchandise for incoming college students
4. Great sustainability using great materials. However some of the plastic products offered
at IKEA whilst cheap are not super sustainable for the environment