IKEA, the world’s largest home furnishing retailer recently announced that it plans to acquire 100% of the shares in TaskRabbit, Inc., an on-demand services platform startup.
To some, this merger deal sounded comically counter-intuitive: IKEA, perhaps the largest do-it-yourself store in the world is buying a Silicon Valley startup that offers small tasks to users including lazy folks who don’t want to be Doing-It Yourself !
The deal is not as funny as it first sounds. There are two categories of folks who buy IKEA furniture – the first is the hardcore Do-it-yourself (DIY) nuts like self who buy IKEA furniture to enjoy the thrill of ‘assembling’ something with their bare hands. The second category is the wide spectrum of folks who go for the Swedish no-frills elegance and lower cost offered by IKEA. This second category may not always enjoy the ‘thrill’ of following an instruction manual to figure out where I6 joins with J2 and B3 or the absurdly small ‘tools’ that come with the kits.
In western countries including the US and Canada, an entire cottage industry sprung up to help IKEA buyers assemble their furniture. Digital forums like Craigslist and Yelp and TaskRabbit have entire sections for servicemen (and women) offering to assemble IKEA furniture. Even IKEA itself had realized the opportunity in offering assembling furniture as a service.
A marriage of convenience
The press release (link) announcing the deal describes business synergies for both IKEA and TaksRabbit
“In a fast changing retail environment, we continuously strive to develop new and improved products and services to make our customers’ lives a little bit easier. Entering the on-demand, sharing economy enables us to support that. We will be able to learn from TaskRabbit’s digital expertise, while also providing IKEA customers additional ways to access flexible and affordable service solutions to meet the needs of today’s customer,”
says Jesper Brodin, President and CEO of IKEA Group.
“Through our unique on-demand platform, TaskRabbit is making life better for both consumers and Taskers. In the communities in which we operate, TaskRabbit provides strong economic impact. With IKEA Group ownership, TaskRabbit could realize even greater opportunities; increasing earning potential of Taskers and connecting consumers to a wide range of affordable services,”
says Stacy Brown-Philpot, TaskRabbit CEO.
TaskRabbit was an early partner of Amazon’s Home Services business when it launched in 2015. It is expected that TaskRabbit will continue to function as an independent company based in San Francisco after the deal is complete. At that time, IKEA customers opting for assembly may be directed to the services provided by TaskRabbit “Taskers”.
The synergies in this deal now seem obvious. And the financials of the deal are unclear. However, one can only begin to imagine Big Hairy Audacious Goal (BHAG) synergies in other areas too; aassuming the deal consultants are able to sell it to corporate executives:
- A hotel giant like Mariott, Wyndham or IHG buying AirBnb?
- Rental car giant like Hertz or Avis buying Uber?
- General motors buying Tesla?
- IBM buying Google’s cloud division?
Compiled by our editor, Mohan