A Blog by Jonathan Low


Feb 21, 2019

Some Assembly Required: Why IKEA May Regret Embracing the Gig Economy

Attempting to provide solutions (and getting a cut) while maintaining that the outcome is not your responsibility is not going to work in an economy increasingly driven by consumers who demand quality - and know their rights. JL

Elliott Kime reports in FT Alphaville:

As Twitter, Ebay and Facebook are discovering, taking responsibility for the quality of relationships is increasingly crucial for platform success. Assembly of Ikea products is commissioned by Ikea customers, acting as micro-employers, in a marketplace organised by Ikea and whose micro-employees are sourced through Ikea’s recommendations. Ikea's intent may have been to get an edge over the competition by offering quality assembly (without related payroll headaches or expense), but the move might (be) more liability than benefit. Today's customers are used to certain standards from the brands they interact with.
Ingvar Kamprad, founder of the world’s largest furniture retailer Ikea, liked to say that the store was like his fourth child. The enterprise was conceived when one of Kamprad’s employees removed the legs from a table to load it into a customer’s car. Soon after, self-assembly furniture sold in flat-packed form became Ikea’s signature “low-cost” offer to customers.
But Kamprad was also a controlling parent who resisted the internet age. He wanted the Swedish furniture retailer to always embody the philosophy of keeping costs low by having customers assemble furniture at home. Kamprad retired in 2013, aged 87, and died last January.
Now seventy-six, his favourite child is trying to make a change of things. But how do you compete on quality, product duration and craftsmanship when your market niche is all about being cheap, affordable and disposable? Enter the gig economy and Ikea's recent purchase of informal jobbing platform TaskRabbit.

Matchmaking with platform economics

It is no secret that Ikea is in experiment mode. The retailer is looking to capitalise on an emerging millennial market in which employment regulations are lax and income is disposable. Taking advantage of the gig economy’s asset light business model while simultaneously fighting off increasing competition in the flat-pack furniture market, Ikea is evolving to fit the demands of platform consumers. But it may be sacrificing its democratising pedigree in the process.
Of course, change is also afoot more widely. Last Wednesday the company told the FT it was planning to launch an online sales platform which would feature products from rivals.
Before that it had announced plans to trial furniture-leasing to customers, in a bid to cast off the reputation that its products are disposable rather than hard wearing. Other innovations include nimble “planning centres” — in contrast to the usual monolithic stores — where customers can get advice and ideas on what to order, before eventually being asked to order online.
Nonetheless, central to Ikea’s new engagement with “other platforms” is its acquisition of gig economy start-up TaskRabbit in September 2017 for an undisclosed sum, and subsequent partnerships signed with rival groups Airtasker in Australia and UrbanClap in India. Combined with production increases in China, these partnerships have pushed Ikea’s total spending on outsourced work from £33m in 2016 to just over £500m at the end of 2018.

When putting up a flat-packed table is too much bother

Rather than taxi rides or accommodation, companies like TaskRabbit trade in household chores, so you the user “can live life.” As online labour marketplaces, these platforms are matchmakers for “posters”, who need small jobs done around the house, and “taskers”, who bid for the work, such as assembling flat-pack furniture.
According to TaskRabbit CEO, Stacy Brown-Philpot, “this is the future of work”. A statistic worth noting is that 70 per cent of TaskRabbits are graduates and 5 per cent have a PhD.
But not everyone agrees. It is, for example, a future dismissed by most labour unions who dub it a superhighway to serfdom.
Unlike Uber drivers, taskers on all three platforms can set their own hourly rates, which include a service fee which goes to the platform. For instance, Task Rabbit take a 15 per cent cut. But the framework is seen as resulting in a race-to-the-bottom for wages. Critics argue the only thing workers are being liberated of is their right to fair pay, conditions and protection against workplace injury and illness.
Part of the issue is that companies like TaskRabbit, Airtasker and UrbanClap do not store or manufacturer anything. Instead they harness existing communities to enable transactions. Value is created on the platform through the accumulation and matchmaking of posters and taskers, and the commission siphoned from each transaction.
The controversies, however, haven't stopped Ikea from bigging up the TaskRabbit service to customers across its 313 global stores in 52 cities around North America and the UK.
Recently Ikea announced that the number of completed “tasks” had more than doubled and that 10 per cent of those were spent assembling flat-pack furniture.
Jesper Broden, CEO of Ikea's parent company Ingka Group, told Reuters:“As this community grows it’s not only about fixing one or two things but actually to add professionalism in interior decoration, into ‘life at home’ practicalities”
In the same interview, he spoke of using TaskRabbit to expand into interior design and furniture repair while utilising its customer data to help Ikea produce new innovations in design.
But can you really have your cake and eat it when it comes to long-lasting well-designed quality furniture, cheap prices and no-sweat assembly? Theoretically, matching platforms operate like casinos, making money irrespective of whether the relationships they facilitate are successful or not.
In reality, as platforms like Twitter, Ebay and Facebook are discovering, taking responsibility for the quality of relationships facilitated is increasingly crucial for platform success.
As it stands, Ikea sits atop a family tree where assembly of Ikea products is commissioned by Ikea customers, acting as micro-employers, in a marketplace organised by Ikea and whose micro-employees are sourced through Ikea’s in-store and online recommendations. Central to this corporate dislocation is TaskRabbits’ infamous 12th clause in their terms and conditions which states that (our emphasis):
The TaskRabbit Platform only enables connections between Users for the fulfilment of Tasks. Company is not responsible for the performance of Users, nor does it have control over the quality, timing, legality, failure to provide, or any other aspect whatsoever of Tasks, Taskers, Clients, nor of the integrity, responsibility, qualifications or any of the actions or omissions whatsoever of any Users. Company makes no representations about the suitability, reliability, timeliness, or accuracy of the Taskers requested and services provided by Users identified through the TaskRabbit Platform whether in public, private, or offline interactions.
This implies responsibility for the quality of the work is removed from Ikea and its partners. It is not yet clear if customers understand this or, for that matter, what the repercussions are for them when things go wrong.
When an Airtasker poster in Australia recently complained about a payment mixup via the platform, the company’s response summed up the nature of this new breed of arms-length customer relationship (our emphasis):
Airtasker’s role is to provide an open online marketplace connecting two types of users — the poster who needs to outsource tasks to be done and the taskers, people who want to earn money working on tasks. Taskers in the marketplace are independent parties engaged in a task contract directly by the poster and are not employees of Airtasker.

No responsibility means no response

Posters and taskers alike seem happy to share their negative experiences on social media and review websites. Complaints range from taskers who have not been paid by posters to posters who have had their new furniture destroyed by taskers whose professed skills were not what was claimed.
On review site TrustPilot, one tasker, who had exclusively received five-star reviews for their work lost more than £700 when successive posters forgot (or refuse) d to pay him.
Another tasker, was also refused payment even after providing proof that their task had been “completed as instructed and also verified by the client.”
In India, meanwhile, a Reddit storm was created when an email received by a poster by accident from UrbanClap CEO, Abhiraj Bhal, was made public. It showed that after making successive complaints regarding an air conditioning machine being left worse off than when the UrbanClapper arrived to fix it, the advice from the CEO to the start-up's employees was to please ignore him completely. No one should answer his queries.”
Also on TrustPilot, a poster in the UK booked an assembler for an Ikea wardrobe for £140 which mysteriously became £315 by the time she received the confirmation email. She wrote: “I find such a hike in price a really dishonest and manipulative selling practice… I was really disappointed as I had everything prepared and ready for the tasker.
When she went to complain to Ikea she could not find any contact details to send a complaint to.
Another poster in the UK hired a TaskRabbit to mount her electric radiators. He asked to borrow her tools before mounting them so poorly that they “wobbled on the brackets.” Despite this, she used the service again to assemble an Ikea wardrobe but this TaskRabbit tasker assemble it facing the wrong direction, which he then claimed as a product fault before reporting this to TaskRabbit and saying he could not complete the task. After contacting TaskRabbit HQ (who in a rare move did offer to send a new Tasker to build the replacement wardrobe) she was told they are “just a tech platform” and cannot monitor the quality of work being completed.
These are just a few examples, but there are many more demonstrating confusion about who is ultimately responsible for their bad experiences.
Ikea's intent may have been to get an edge over the competition by offering quality assembly (without related payroll headaches or expense), but the move might yet turn into more of a liability than a benefit. Today's customers are used to certain standards from the brands they interact with. If those brands tie themselves to systems that deal with their customers in their name without corresponding oversight or control, things can backfire pretty quickly.
As they say, you get what you pay for. That applies as much to global furniture retailers, as it does to everyday customers.
When asked about the issues, TaskRabbit said:
Regarding our role with the IKEA Furniture Assembly program, TaskRabbit facilitates the booking of the Tasker and provides support during and after the task itself. If a client or Tasker has any concerns about the task performance or timeliness, they would contact us. However, if the concern or issue is related to the IKEA product range or delivery, they need to contact the company.

We value our relationships with clients and Taskers, and want to ensure a positive experience for all of our users. In those instances that are less than perfect, we are committed to making it right.


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