006

Saif Islam

IKEA Springvale

Tasmania Project FY14 Summary Report

P a g e | 2

Table of Contents

Executive Summary: ..................................................................................................... 3

Tasmania and PMA: ...................................................................................................... 4

FY14 Customers Locations: ............................................................................................ 5

FY 14 Total Sales: ......................................................................................................... 6

FY 15 Things to Do to Make It Happen: ...................................................................... 7

Top 20 Selling Items: .................................................................................................... 9

HFB Splits for Tasmania FY14:...................................................................................... 10

Orders Volume Size & Weight: ..................................................................................... 11

Low Cost Packaging Solution: ....................................................................................... 12

Opportunity to Increase Fill Rate: ................................................................................. 17

Our Dispatching Facilities: ........................................................................................... 18

Customers Feedback: .................................................................................................. 18

P a g e | 3

Executive Summary:

This report publishes FY14 yearly overview and case by case scenario based analysis and

evaluation for IKEA Tasmania Home Shopping Project. From September 1st 2013 to August 31st

2014, we have experienced some teething problems along with significant improvements of

order fulfilment process and lowering the operational costs. Received feedback from ASR and

SEC check were addressed to the key decision makers for further improvement the working

method for Tasmania project and the process is in the pipeline. This project experience is

addressing the experiment of “Zero Waste IKEA” concept by re-using the packaging materials

and damaged goods from Recovery & Goods flow to ship outflow orders for remote orders.

That's one small step for “Zero Waste IKEA” in the future!

Source of collected data integrated into this report from: GADD reports for MHS & iSell, iSell

sales and services order list, IKEA Springvale 006 daily sales record, GLJ003 NAB account

statements, SAMS, customer’s experiences and feedback for TAS Home Shopping, interviews

with the stakeholders, customer’s database and social media. In addition, please consider the

limitation of some data range. If there are any information gaps or other errors please accept

the author’s sincerest apology in advance.

Project Tasmania team would like to acknowledge the unparalleled support, motivation and

guidance of Innes Ritchie for his dedicated support with our Tasmania project. A very special

thank you goes to Michael Donath, Jordan and his CSC Team, Mark Mitchinson, Alastair

Morgan, Thomas Folke Andersen, Brendan Groll, Duc Pham, Tim Nguyen, Randle McDougall,

Sarah Everett, Mark Findlay, Kariyawasam de Alwis, Mario Bozic, Yasith Mallikage, Johan

Vinnersted, Frank Murphy, Graham West, Metin Seyit, Bianca Speller, Kathy Le, Ling Oh, Grace

Borazio, Maria Nimmervoll, Parit Shah, Hoang and many more people for their dedicated help

with our Tasmania Project. To develop this report, some of the data, images, maps and graphs

were directly quoted from either online or social media and the list of the sources are included in

the reference. Trevlig läsning!

P a g e | 4

Tasmania and PMA:

Tasmania colloquially known as "Tassie"; is an island state, part of the Commonwealth of

Australia, located 240 kilometers (150 mi) to the south of the Australian continent, separated by

Bass Strait. The state includes the island of Tasmania, the 26th largest island in the world, and

the surrounding 334 islands. The state has a population of 507,626 (as of June 2010); of

whom almost half reside in the greater Hobart precinct. Tasmania's area is 68,401 square

kilometers (26,410 sq mi), of which the main island covers 64,519 square km (24,911 sq mi).

Hobart, Tasmania's capital city is located on the Derwent River in Tasmania's south and is

within a 90-minute drive of some of Tasmania's most visited attractions. Founded in 1804 as a

penal colony, Hobart is Australia's second

oldest capital city after Sydney, New

South Wales (Ref: http://www.discover-

tasmania.net.au/region/hobart ). The city had

a greater area population of approximately

217,973.

In FY14 IKEA Tasmania project attracted

approximately 70% orders origin from Hobart.

Hobart City, Tasmania. Image credit: Wikipedia

P a g e | 5

IKEA Shop Select Collect - our ordering service that's bringing IKEA solutions to Tasmanian

homes. Customers can simply order online, pay over the phone, and then pick up their goods

from one of two Tasmanian Tasfreight (freight provider) locations:

LAUNCESTON BRANCH

49 Translink Ave South,

Western Junction,

Tasmania, 7212

HOBART BRANCH

57 Greenbanks Road,

Bridgewater,

Tasmania, 7030

Launceston is the second largest city in Tasmania after Hobart, with a population of 106,153.

It is the ninth largest non-capital city in Australia. It is the only inland city in Tasmania.

FY14 Customers Locations:

In FY 14 IKEA Tasmania project attracted approximately 70% orders origin from Hobart, 20%

from Launceston and 10% orders from other locations.

Launceston, Tasmania. Image credit: Wikipedia

P a g e | 6

FY 14 Total Sales:

According to IKEA Springvale’s daily sales record FY 14 Tasmanian sales is

$1,305,904.65.

Monthly Breakdown:

Tasmania project started showing a very strong growth sign but due to high demand and some

teething problems of the process, sales volume dramatically dropped in January 2014 however,

in the past couple of month’s (June onwards) sales & delivery volumes considerably increased.

Weekly Analysis:

The graph below published the weekly breakdown for FY14 total sales volume. The biggest

challenge for the project is to get the regularity of the daily orders.

P a g e | 7

FY 15 Things to Do to Make It Happen:

Some of the recommendations to improve our daily sales order volumes in FY15 are:

Offer parcel and post home delivery service without any lengthy waiting time. Adjust the

delivery fees depending on the order’s price, volume, destination & size to attract more

customers with less buying power. “Our idea is to serve everybody, including people

with little money.” - Ingvar Kamprad. We did some test runs from Springvale store to

Tasmanian customer’s home delivery with a tracking service (2 working days delivery time)

via Australia post before to see the feasibility. Ref:

Execute a more constructive marketing plan that is more related to e-Commerce and more

web platform based for the home furnishing target market. However we also would like to

invite our Tasmanian customers’ to visit our inspirational IKEA store as well, especially if

they want to do more complex buying process such as IKEA kitchen or PAX planning.

Enhance customer’s shopping experience by providing better customer service. Tasmanian

customers believe more word of mouth due to the state’s isolated geography.

Today’s better customer service will bring more business for tomorrow. As Ingvar said

“What is good for our customers is also in the long run good for us.”

Develop the current online platform to shop 24/7, so our Tassie customers are able to shop

whenever and wherever it suits them, not just Monday to Friday 10am to 5pm!

P a g e | 8

Further development of simple & more user friendly aftersales support. i.e. broken panel

replacement, spare parts, quality issue, buying additional items to compliment, not at

location / out of stock follow-up, transport issue.

Within the next few years open a Pickup, Order & Aftersales mini IKEA (Next Generation low

volume & low functional IKEA) at

Hobart to suit Tasmanian demand.

The mini showroom will contain 100+

top selling items. The mini showroom

has to be easy to maintain and

operate. The co-workers who will be

working there will predominantly

assist customers to make a sales

order i.e. kitchen, PAX systems etc.

and our IKEA Springvale /

multichannel support team will

dispatch the goods to the remote

customer’s location. It will be

interesting if a 3D animated room

setting is added as well. P.S. I borrowed the basic idea from Innes Ritchie. This picture on

the right is a sample of how a mini N.G. IKEA may look like.

Open multiple other remote pickup locations to sell goods to newer market, mainly the

regional areas.

P a g e | 9

Top 20 Selling Items:

Most popular by the amount of quantity sold in FY14 TAS

1).

2).

3).

4).

5).

6).

7).

8).

9).

10).

11).

12).

13).

14).

15).

16).

P a g e | 10

17).

18).

19).

20).

HFB Splits for Tasmania FY14:

Please note: In FY14 Kitchen was the highest contributor for the yearly total sales. However, we

only started to mainstream the kitchen sales for Tasmania from late April 2014. With

only the four months of contribution, our kitchen became the major interest for the

Tasmanian customers. Considering the rapid growth of interest of our IKEA Kitchen in Tasmania,

we can forecast about 40% of total sales will be generated from Kitchen in FY15.

P a g e | 11

Orders Volume Size & Weight:

We were able to retrieve the data only for the past quarter (17th of June 2014 to First week of

September). According to the data, in the past 11 weeks we sent 228.1m3 (Cubic meter)

of sales order total value $347,744.69 + Service order value $25,292 average total order value

$1703 per customer. Average order weight 220.67kg and size 1.07m3. The heaviest

order for FY 14 was 3,293.4kg and highest valued order was $19766.72 customer ref:

Julie Heckscher.

Let’s see some of the typical Tasmanian orders and what it looks like after packing:

P a g e | 12

Low Cost Packaging Solution:

Our Tassie Team is always looking for the best uses of the available resources at IKEA. Our

Tassie team, came up with a solution to use good panels from damaged IKEA furniture /

flat packs (normally we used to bin them) to use as a pallets to ship variable sized goods. The

new pallet is about 40% slimmer than the wooden pallet and costs literally nothing. Therefore,

we saved money and trees by not using the wooden pallets in most cases. On top of

that, it helped us to increase the container fill up rate as well due to its slimmer and more

adjustable size advantage.

In addition, we collect all other packaging materials from inbound goods flow, like

empty cardboard boxes, paper legs and pallets, corners protective materials (we used

to treat them as general waste). Then we re-use these packaging materials to send

customers online orders for our project. This project experience is addressing the

experiment of “Zero Waste IKEA” concept by re-using the packaging materials and damaged

goods from Recovery & Goods flow to ship outflow orders for remote orders. That's one small

step for “Zero Waste IKEA” in the future!

P a g e | 13

We Collect:

P a g e | 14

We Re-Use:

P a g e | 15

P a g e | 16

P a g e | 17

Opportunity to Increase Fill Rate:

In our picking and dispatching team we tried our best effort to increase the fill rate by using our

available resources. Tasfreight container capacity is about 85 cubic meters. In our best record to

send the full trailer we used maximum of approximately 48 cubic meters including the

packaging materials. The orders sizes are varied and uneven; let’s have a look how the inside

looks like:

If we can implement collapsible, multi level adjustable caging system inserted inside the

trailer to adopt variable size order, then the fill up rate will improve to lower the transport

cost as well as be more environmentally friendly.

P a g e | 18

Our Dispatching Facilities:

We share dock with goods flow, from 10am to 6pm Tasmania Outflow team work in dock 7 to

pick, pack and dispatch goods to Tasmania. 80% of this department’s furniture was made out

of hacking different varied IKEA products’ parts from our recovery departments.

Customers Feedback:

We listen to our customers and both their positive and negative feedback helped us to

make the project experience better for our future customers. In FY14 December to March

we experienced some internal problems in store. Some customers experience delayed service.

We learned from those mistakes and tried to make a better experience for our Tasmanian

customers. In the past couple of months we received some inspiring feedback emails

and calls from our Tasmanian customers and suppliers. Here are a couple of them:

P a g e | 19

P a g e | 20

Reference and read full feedback: http://www.movetotasmania.com.au/ikea-delivery-tasmania-

experience/#.VBg8beOSyPY

P a g e | 21

P a g e | 22

A big TACK! To our CSC Team & Store team, it is good to see that all your efforts are starting to

pay off. In addition; we still have a lot of room for improvements! Gö IKEA.

To watch our Tasmania Project‘s Short Film, Click Here!