Have you ever wondered how IKEA has lowered the costs of its products? The brand has made a niche in selling high-end beds, sofas, dining sets, and wardrobes at half the price of its competitors, but how does it do so? IKEA uses several methods to keep its prices low while maintaining quality. Let’s discuss 05 Methods of How IKEA Keeps its Costs LOW?
#5: A Reverse Design Process
The price range of a particular product is the first thing IKEA decides before it is designed. On the other hand, most competitor brands follow the conventional process of selecting a design theme, creating a storyboard, procuring the materials, assembling the design, and then pricing it according to its cost, whereas IKEA does the complete opposite.
#4: IKEA’s Flat Packaging Innovation
IKEA’s founder, Ingvar Kamprad, introduced an innovative selling system in 1956, called ‘flat-packaging’. This flat-packing selling technique has now become lKEA’s identity. So, what exactly is flat packaging? It is a method of selling furniture that involves IKEA selling parts rather than the whole item.
Packaging the product pieces this way facilitates more accessible store transport and consumes less space. As a result, transportation costs are significantly reduced. Additionally, customers can choose customised fragments according to their convenience.
#3: Unique Construction Technique
As part of the construction process, IKEA layers sheets of wood over a honeycomb base structure. It costs less to produce honeycomb cores since they require less wood. While maintaining a low cost of products, IKEA does not compromise on quality.
#2: IKEAs Self-Help Stores
IKEA promotes independent shopping. Independent shopping – what is it? Customers have the option of shopping alone. There are only a few store employees employed by IKEA. They can therefore cut wages and pass these savings on to customers. The price tags provide all product details, cautions, installation instructions, etc., so customers can shop independently. As a result, customers can easily read the price tag and choose furniture without the assistance of a third party.
#1: Take it Home Policy
IKEA’s policy is that customers can carry their purchases home alone. IKEA does not charge customers delivery fees or increase product prices to facilitate free delivery since customers can carry their products themselves. By doing this, overhead costs for delivery are reduced.
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How IKEA Manages to Keep Its Prices Low: