Ikea parent Ingka Holding BV announced Thursday, Sept. 28, that it would acquire gig economy startup TaskRabbit Inc. for undisclosed terms.
The deal was signed on Monday, Ikea said in a statement, adding it anticipated the transaction would close next month. TaskRabbit will become a fully owned, standalone entity operating independently within Ikea out of its current San Francisco headquarters.
TaskRabbit, which matches customers with "Taskers" who can complete tasks such as home repairs, launched a pilot program with Ikea last year in which Taskers assembled Ikea's notoriously tricky flat-pack furniture.
The company operates in the U.S. and London, but Ikea said in its statement that it may expand TaskRabbit to other countries.
KeyBanc Capital Markets Inc. analyst Bradley Thomas estimates that in the United States, Ikea is the third-largest furniture retailer and the 10th-largest home furnishings retailer.
"We believe IKEA has underperformed in e-commerce in recent years," he wrote. "Customer service and call centers have not been well integrated into the business, in our opinion." The addition of TaskRabbit "adds digital customer service capabilities to IKEA that more and more furniture, home furnishings, and e-commerce retailers are offering."
The Swedish furniture giant, technically owned by a Dutch nonprofit, the Stichting Ingka Foundation, reported 2016 retail sales of €36.4 billion ($42.8 billion), up 8%.
In addition to full fiscal 2016 retail sales, Ikea, which recently changed its fiscal calendar, reported financial results for the eight months ended Aug. 31, 2016 -- the new end of its fiscal year. Net income of €258 million during the period was "in line with the prior year's performance." The company ended the period with €302 million in cash and equivalents on hand.
TaskRabbit has raised about $38 million in venture funding to date, most recently closing a $13 million Series C round in 2012. Peter Thiel's Founders Fund led the round, joined by existing investors including Shasta Ventures, Lightspeed Venture Partners, Baseline Ventures and 500 Startups.
Recode, which first reported the acquisition, noted it mirrors Amazon.com Inc.'s (AMZN) - Get Report moves into home product installation services. Under the terms of a recent deal with Sears Holdings Corp. (SHLD) , Amazon will sell the retailer's Kenmore appliances online, while its Sears Home Services and Innovel Solutions divisions will provide installation services. Electronics retailer Best Buy Co. (BBY) - Get Report similarly offers in-home installations and repairs through its Geek Squad service.
"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," Ikea CEO Jesper Brodin said in the statement, adding that increasing urbanization and the proliferation of online shopping is forcing Ikea to become faster and more flexible. "An acquisition of TaskRabbit would be an exciting leap in this transformation and allows us to move forward with an even greater focus on innovation and development to meet changing customer needs."
Ikea also has beefed up its online presence, with a record 2.1 billion unique visitors to its website in 2016, compared with 783 million store visits, and new services such as pick-up points for online orders.
The company has no real analogue, but home furnishing retailers such as Bed Bath & Beyond Inc. (BBBY) - Get Report and Pier 1 Imports Inc. (PIR) - Get Report have struggled to adjust to the digital-focused retail environment.
Ikea and TaskRabbit did not respond to requests for comment.
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