Executive Summary on IKEA Circular Business Model Solutions

IKEA aims to utilise both new and existing circular initiatives to make sustainable choices easier
and more convenient for the many customers.

Solutions:

Green Wallet: Green wallet is a reward based wallet that will be released by IKEA. When
customers perform any “green” initiative: buy-back, furniture rental or selling on IKEA
Community*, points will be provided to their wallets as rewards. These points can be later used
to buy IKEA products, avail discounts on Airbnb,flights etc. (subject to B2B partnerships formed
by IKEA)

“Plant a Tree” initiative: To tap in the large 40% market of supporters who acknowledge the
importance of consuming less, reusing and recycling more but find it difficult to do so, IKEA will
release this initiative where IKEA will promise their consumers that for every 20 points on their
Green Wallet, IKEA will plant a tree in their name. This initiative will provide the supporters
with a sense of empowerment and will in turn increase the existing circular initiatives.

*IKEA Community: Cashing in on the 4 Billion traffic to reach their sustainable goals, IKEA
must create a forum or a community page where users can do the following:
1. Social activities like requesting product troubleshooting, interior designs, etc.
2. List their used products: In this case, the user has to go through IKEA’s standard
buy-back checks and pricing to list the product.
3. Buy used products: Users can also buy the listed and verified products from the
community page.
As an incentive to the users for carrying out green initiatives on the forum, users will be
rewarded points on their green wallet. The forum will also act as a customer experience
enhancement for IKEA.

Incentivising Real Estate: IKEA must forge B2B partnerships with real-estate companies. A
real-estate company lets say, “X” when it lists a house will sell the previous owner’s furniture to
IKEA for a credit amount. On the other hand, while selling houses, IKEA will provide furniture to
the new buyer at a discounted amount during which X can earn commissions. Since real estate
companies have frequent listings and sellings, the cash cycle will be small for X.

Concluding, the points put in this summary will result in a 42.34% growth in 2021-25 from the
existing number of customers currently participating in the circular initiative(s) by IKEA.
The slide deck below will elaborate on this further.
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Ayananta Deb | Dibyendu Patra | Arghya Gupta | Rodsi Sarkar
 Executive Summary:
Our Suggestions to attain Sustainability

Targets Suggestions
Introduction

Green Wallet Green Wallet

Reward based point system for users to avail at IKEA stores or B2B partners
Strategic initiative(s) to
Plant a Tree increase the users of their Plant a Tree Initiative
Tapping the “Supporters” market by empowering them
existing circular initiatives.
IKEA forum IKEA Forum
Increasing customer engagement, and giving users a platform to buy and sell

Real Estate

Conclusion Additional Circular Incentivising Real Estate

initiative B2B Partnership with Real Estate companies enriching “green” initiative

2
 Green Wallet (1/2):
A Reward based Loyalty Program

Why would a customer “X” sell back to IKEA? Why would a customer “X” sell back
to IKEA?
Introduction 1. Discount Voucher for IKEA of 10-50%.
2. ? 1. Discount Voucher for IKEA of
Green Wallet 10-50%.
2. Discount at their next AirBnB
Plant a Tree What if X wants to travel for the year? stay.
~ X would not want to buy IKEA products for the 3. Frequent Flier Miles for their
near future for a variety of reasons. next travel and more!
IKEA forum

Real Estate Introducing “Green Wallet”! How can X get Green Wallet points?

Conclusion Green Wallet will not only allow X to avail said 1. Buy-Back.
discounts at IKEA, but also avail services at AirBnB, 2. Furniture Rental.
Uber, Qatar Airways, etc. (Subject to B2B 3. Sell/Buy at IKEA Forum.
partnerships formed by IKEA) ~Any Green Initiative!

3
 Green Wallet (2/2):
A Reward based Loyalty Program

Brand Awareness- Greater

Introduction outreach about the
sustainable
initiatives by IKEA.
Green Wallet

Plant a Tree Financial Impact-

Incremental participation
in not only BuyBack
IKEA forum Source: Harvard Business Review program but also the
(https://hbr.org/1995/05/do-rewards-really-create-loyalty ) sales.

Real Estate
Customers prefer rewards
Synergies- Increased
Conclusion programs with cash value, customer
relevance, choice, touchpoints.

aspirational value, and

convenience.
4
 Plant a Tree Initiative :
An initiative to tap the supporter market

Introduction
Supporters Segment: Plant a Tree Initiative:
The supporters attitudinal segment Alfred belongs to the Supporter
Green Wallet constitutes of 40% across 30 Attitudinal segment and was
markets. looking for a way to help the burning
Plant a Tree Amazon rainforest.

Characteristics of the supporters He traded in the IKEA study table

IKEA forum
segment: and lamp he no longer needed to Name: Alfred Jones
Location: LA,
1. Acknowledge the importance earn 20 Green Wallet points and California
Real Estate of consuming less, reusing played his part in helping the
Profession: Student;
works part time at
Starbucks.
and recycling. environment. Cares about the
Environment but
Conclusion 2. Find it difficult in practice to finds it difficult to
put his ideologies to
do so. practice.

5
 IKEA Forum (1/3):
Leveraging the 4 Billion Website Traffic to attain sustainability goals

“Excellent customer service is the number one job in the company. It is the personality
“
of the company and the reason customers come back. Without customers, there’s no
Introduction company.

Green Wallet IKEA Forum is a community platform where IKEA customers can connect with each
other and the company.
Plant a Tree
IKEA forum brings all it’s customers
IKEA forum
at one place. A platform where
users can request for product
Real Estate troubleshooting.

Conclusion The user can schedule session with

an IKEA expert who would guide
him over video conferencing on how
to repair or assemble a product.

6
 IKEA Forum (2/3):
Leveraging the 4 Billion Website Traffic to attain sustainability goals

IKEA forum will also act as a sustainability community Other benefits of IKEA
Introduction where verified IKEA accounts will promote environment forum:
friendly activities related not only to IKEA but also 1. “Crowd sourcing”
Green Wallet encourage and create awareness for the service and support.
Disempowered and Sceptics. 2. Consumer Research.
Plant a Tree 3. Social Customer
Relationship
Management
IKEA forum The forum will also act as a social media page for
threads on various furnishing points such as Interior
Real Estate Design.

Conclusion
The forum will be a new touchpoint for the company.

7
 IKEA Forum (3/3):
Leveraging the 4 Billion Website Traffic to attain sustainability goals

While moving, X wants to sell his X lists their furniture on the Forum
Introduction old furniture. They log in to the which goes through the usual IKEA
IKEA Forum to earn a few Green buy-back checks and a price is
Green Wallet Wallet points. determined for X’s furniture.

Plant a Tree

IKEA forum Y recently moved to NYC and finds

X’s listing. Y purchases some of X’s
Real Estate verified furniture from IKEA forum and
both of them earn Green Wallet
points.
Conclusion

8
 Incentivising the Real Estate Space (1/3):
Forging partnerships with Real Estate Companies

Building B2B partnerships with

Introduction Real-Estate agencies will help
achieve sustainability goals.

“
Green Wallet

Plant a Tree Listing: Agency will sell-back 9.8 Million Tons of

previous owner’s IKEA furniture in
turn of credit amount while listing a Furniture go to waste
“
IKEA forum house.
annually
Real-Estate
Buying: Agency will offer Source: Reuters
Conclusion discounted IKEA furniture to listed
house buyer keeping their
commission.

9
 Incentivising the Real Estate Space (2/3):
Forging partnerships with Real Estate Companies

Introduction

Green Wallet

Plant a Tree John is selling his house and moving to San

Francisco
Name: John Anderson
Moving From: LA, California
Profession:Investment Banker.
Moving To: San Francisco

IKEA forum

Real Estate A Real Estate Management Agency is

taking care of his migration. They will
manage to sell this house and make
John happy :)

Conclusion

A new potential buyer likes the house. They

buy it and the Real Estate Company offers
them new discounted IKEA furniture to
refurbish the house and earns their
10 commission.
 Incentivising the Real Estate Space (3/3):
Forging partnerships with Real Estate Companies

Houses sold in USA in 2019 6 Million

Introduction
IKEA Market Share 9%

Green Wallet
Houses IKEA caters to 540,000
Plant a Tree
Estimated Penetration Rate 10%
IKEA forum
Houses enlisted on Buy-Back 54,000
Real Estate
Average IKEA products in one household 6
Conclusion
Number of products saved 324,000

By analysing the success of program in USA, IKEA can extend this operation
11 to Europe or Pacific region in subsequent years.
 A Summary of the suggestions, challenges, difficulty and
benefits
Strategy Challenges Difficulty Benefits

Introduction
Green Wallet Forging Partnerships with HIGH Loyalty programs have resulted in
brands like Airbnb or airlines. 25-30% increase in sales.
Green Wallet

Plant a Tree Plant a tree Ensuring LOW Reaches out to the “Supporters”
attitudinal segment which comprises of
40% of the market.
IKEA forum
IKEA Forum Onboarding Customers onto LOW Ease in reaching out to more audience
Real Estate the platform and making the buy-back process
hassle free.
Conclusion Extending to Convincing Real Estate MEDIUM A method to encourage sustainability
Real Estate companies to partner with to a growing 8.91 Billion USD market.
IKEA.

12
 IKEA Forum and Real Estate Roll-out timeline

Introduction

Green Wallet

Plant a Tree

IKEA forum Creation of an

action plan and Real-Estate extension Saving ~200,000 furnitures with the
finding potential
help of real estate alone
Real Estate Real Estate firms 2024-25
2022

Conclusion
2021 2023-24
Forging deals with real Saving ~324,000 furnitures with the
estate firms to cater to help of real estate alone
10% of the households that
use IKEA products

13’
 In 2021-25, IKEA will grow its existing circular initiatives
By 42.34%
Active IKEA forum users by 2023
20,000,000

Introduction Estimated Penetration rate 1% for buy-back

Additional quotes generated

Green Wallet 200,000
Number of homes from real-estate
Plant a Tree vertical 54,000

Total additional customers reached

254,000
IKEA forum
Growth over existing value 42.34%
Real Estate

Conclusion Assumption: 2020 2025

600,000 current users for Buy-Back
program.

14 IKEA will sail through to reach its sustainability goals.