Mar. 11 (NBD) -- Swedish-founded furniture giant IKEA on Tuesday opened its flagship store on Alibaba's marketplace Tmall, the first time for the 77-year-old company to sell products on a third-party online platform.

Anna Pawlak-Kuliga, CEO and president of IKEA China, said that the launching of the flagship store on Tmall is an important part of IKEA's business transformation strategy, and the firm is also groping for other ways to achieve the goal. For example, IKEA will open a smaller format IKEA store in Shanghai's Yangpu District.

Photo/Wang Xingping (NBD)

National Business Daily (NBD) noticed that the furniture retailer will first launch around 3,700 products on the shop. It currently only serves consumers in Shanghai, Jiangsu, Zhejiang and Anhui provinces and will extend servicers across the country.

Customers will be able to visit IKEA's online and brick-and-mortar stores with one membership account.

China is seen as one of IKEA's key markets. Entering mainland China in 1998, the company now operates 33 standard stores in the region. Last August, Anna Pawlak-Kuliga announced in a press conference that IKEA would invest 10 billion yuan (1.4 billion U.S. dollars) in the Chinese market in the fields including store operation, talent introduction and digitization during 2020 fiscal year ending August 31, 2020. 

In the conference, IKEA released its business transformation strategy in China which focused on sales channel expansion, digitization and creating specialized services.

NBD found that in an effort to develop new sales channel, IKEA began to provide online service through its Chinese official website serving 227 cities in the country in October 2018. Besides, it set up the IKEA China Digital Innovation Center in early July last year to develop technology applied to product sales.

Some held that the furniture giant's business model shift resulted from recent sliding sales growth in China and fierce rivalry in the market.

From 2017 to 2019, IKEA reported sales in China of 13.2 billion yuan, 14.7 billion yuan and 15.77 billion yuan, respectively, with year-on-year growth rate declining from 14 percent in 2017 to last year's 7.3 percent. The growth was mainly contributed by newly-opened stores.

While going online became a new trend for the furniture retailing sector, Chinese retailers such as the top players Red Star Macalline and Easyhome kept pace with the trend ahead of IKEA and gained benefits from the online sales growth.

On the Double Eleven Shopping Festival of 2018, Red Star Macalline and Easyhome reaped a total of more than 16 billion yuan and over 12 billion yuan in sales volume, respectively. Last year, more than 48 home furnishing brands posted the transaction amount of over 100 million yuan on the single day of November 11.

Email: gaohan@nbd.com.cn