IKEA Supply Chain: Lessons from the Retail Mogul

IKEA products are so popular that they’ve created a challenge for Swedish tourism. As Sweden’s “Discover the Originals” campaign points out, IKEA borrowed hundreds of real Swedish place names for its furniture. As a result, promoting these destinations online has become difficult: trash bags, toilet brushes, and gaming chairs outrank actual lakes and villages in search results.

This is just one example of the influence the all-in-one home goods retailer has had on modern culture. Beyond cultural impact, IKEA has significantly shaped how companies manage inventory, supply chains, and sourcing. Let’s explore the Swedish giant’s most ingenious innovations—and what e-commerce businesses can learn from them.

IKEA Supply Chain Ecosystem

First, let’s outline the main players in IKEA’s ecosystem—franchisees, suppliers, and sourcing partners:

IKEA operates under a franchise system managed by Inter IKEA Systems B.V., a Swedish company. Franchisees—such as the Ingka Group, which runs most IKEA stores worldwide—are granted the rights to operate IKEA stores in specific regions. They pay fees and follow IKEA’s guidelines for store layout, brand experience, and product offerings.

IKEA works with thousands of suppliers around the world, each responsible for producing components or finished products under strict standards (for example, the IWAY code of conduct). These suppliers ensure that raw materials and finished goods meet IKEA’s requirements for quality, sustainability, and cost.

In addition to these suppliers, IKEA collaborates with specialized sourcing partners to secure materials (wood, textiles, metals, etc.) at scale. By working closely with these partners, IKEA enhances product quality, controls costs, and maintains reliable access to essential resources across its global supply chain.

Lesson 1: Own the Entire Supply Chain

IKEA controls everything from raw material sourcing to product design and distribution. Yes, if you weren’t aware of it—IKEA is different from other retailers because instead of relying fully on intermediaries, like food hypermarkets, it limits their involvement. For example, when hiring truck drivers, IKEA allows only one layer of subcontracting, striving to create better visibility into drivers’ working conditions.

The global company is, on one hand, highly decentralized, delegating many tasks where they are performed best. For example, IKEA chooses to produce items where the raw material is. Most cotton-based items are produced in India because that’s where raw materials are.

On the other hand, the company remains highly centralized in terms of the corporate values: it uses the IKEA Concept as a way to “standardize” the practices of franchisees, and IWAY, the company’s supplier code of conduct, to pick and efficiently manage suppliers around the world.

This control over the entire supply chain not only ensures brand authenticity across the globe, but also allows for lower costs.

How to Implement It as an SMB

While it would be crazy to try to emulate a global company as a small business, we can still learn something. Consider these ideas:

1. Map out key links—raw materials, manufacturing, and distribution—and identify critical bottlenecks. Our article on the costs of starting an e-commerce business might help you navigate the e-commerce value chain.
2. Whenever possible, bring smaller operations (like packaging or quality control) in-house to maintain product standards. A note from the founder or a personal gift inside the delivery box can make a difference for the overall customer experience.
3. Implement simple, cost-effective inventory management software to track key metrics in real time. By progressively gaining more oversight, you can strengthen supply chain reliability.

Meet BoxHero, a simple inventory management solution perfectly suited for small e-commerce enterprises. More importantly, if your inventory is under 100 items, BoxHero is free! For bigger shops, it’s $20 per month.

Here’s how to start your path to a smooth inventory management process with BoxHero:

Sign up for a free 30-day trial of BoxHero, or request a product demo.

Lesson 2: Nurture Supplier Relations

IKEA’s success hinges on forging strong, collaborative relationships with its suppliers: their average length of supplier relationships is 11 years!

This remains the case despite the thorough pre-contractual screening and regular compliance verifications when the partnership is active.

While it might be challenging to even become IKEA’s supplier, working with IKEA has brought positive transformation to local economies around the globe. A notable example is the company’s partnership with Polish furniture manufacturers. Poland has become one of IKEA’s largest production hubs, providing thousands of jobs to the local workforce and boosting the country’s manufacturing sector. Over time, these partnerships have fostered/driven stimulated entrepreneurship, improved workers’ skills, and spurred further investment in related industries, such as logistics and packaging.

By signing long-term contracts with suppliers and owning the production cycle, IKEA achieves better pricing conditions, which translates into lower consumer prices. It’s part of why people around the world keep choosing IKEA over other stores.

How to Implement It as an SMB

You may not have an entire factory manufacturing goods for you exclusively, but you surely have contractors who help you do your business. Here are tips for improving relationships with partners as an SMB:

1. Choose vendors and employees who match your standards on quality, ethics, and pricing—rather than chasing the cheapest option. If you don’t have these standards established yet, create them. This can take the form of briefs, guidelines, and style guides which would help your contractors understand what you’re looking for.
2. Solidify valuable partnerships with transparent communication. Communicate misunderstandings if they occur, and practise empathy to stay on the same page with your contractor, even if there’s a problem.
3. Pay on time and offer fair terms, which goes a long way in building trust and loyalty.

Remember IKEA’s 11-years partnership retention time and strive for similar in your partner relationships!

• Upload info on partners individually or in bulk, using an Excel file.
• Later, when registering stock-in or stock-out transactions, sales and purchase orders, you will be able to connect them to a partner record.
• In the Transactions menu, you can see all inventory transactions and filter them by partner.

BoxHero will not replace a CRM, but you can rely on it in storing the key information about your inventory partners.

Lesson 3: Transform Practical into Promotional

The Wall Street Journal highlighted one important thing about IKEA’s business, citing an actual academic research paper. IKEA took the concept of do-it-yourself (DIY) furniture, which was economically beneficial for the company, and made customers love it, achieving a win-win situation.

Unlike traditional furniture retailers, IKEA started delivering items to stores unassembled in flat packs that easily fit in any car. This helps save space during shipping and in the warehouse, lowering the costs for overall logistics.

In a traditional retail experience, the process looks like this: I come to the store, talk to the salesperson, pick the sofa that I like, and wait for it to be delivered to my home.

With IKEA, customer experience is a little different: I come to the store, pick the sofa that I like, bring it home in a flat box, and assemble it myself following IKEA’s manual. 

Sounds like more work for the customer, doesn’t it? Yet,  who would have thought that people would love it so much that it would become part of IKEA’s brand identity? 

Researchers call this phenomenon “The IKEA Effect”—the idea that people like to use things they’ve helped create.

Additionally, IKEA leverages its spacious offline stores and showrooms as part of its overall strategy to drive customer engagement. The stores serve as more than just places for transactions; they are brand experiences where customers can physically interact with the furniture, test products, and plan their home setups. At the same time, these vast showrooms efficiently store massive inventories.

“In-store inspiration is fundamental,” says Catherine Bendayan, former Deputy CEO of IKEA France and Germany.

Of course, you can not invent another flat box. But look at it this way: when introducing flat boxes, IKEA acted in line with their ethos, trying to make shipping more sustainable. Then, they dared to share what they’ve invented with the customers, and customers loved it back. This is an example of brand integrity, and this is something to learn from IKEA.

How to Implement It as an SMB

1. If you feel that your brand lacks integrity, look at your supply chain for inspiration. Do you use your cousin’s illustrations on your T-shirts? Make your brand about sisterhood and women empowerment! Are your takeaway bags unusually large because many families shop for weeknight dinners at your cafe? Talk more about the importance of family gatherings.
2. Spotlight these “functional perks” in your marketing, explaining how they benefit both your customers (unique artistic illustrations, healthy takeaway meals) and your brand values (creativity, convenience).
3. Encourage user-generated content (UGC), whether it’s reposting photos of customers wearing your T-shirts or sharing reviews of their dining experience.

Conclusion

IKEA’s story teaches us these key lessons:

• Seek control over the entire value chain of your business. Try to minimize the influence of intermediaries. This will help you maintain lower costs and a strong brand.
• Nurture relationships with your contractors. Balance control and strict standards with generous perks for those who comply with them to encourage long-term partnerships.
• Turn your supply chain practices into brand advantages. The way you create and deliver your products can be a constant source of inspiration to better connect with customers.

For more insights and ideas for e-commerce businesses, check out the BoxHero Blog!