IKEA Philippines apologizes for server meltdown

IKEA Philippines issued a formal apology to customers that logged in to IKEA PH’s website at midnight on Tuesday night only to find that the website unresponsive due to extremely high demand that IKEA PH did not “anticipate”.

The company said that it had expected approximately 120,000 customers to sign-up for its membership on Wednesday, but that the website’s “technical problems” began when over 100,000 people attempted to register in the first minute after launch.

IKEA PH is scheduled to open its online shop for orders in just a few months, with the full opening of its first PH store (in SM Mall of Asia) scheduled for sometime in Q4. IKEA sells a wide range of household furnishings and other products that are designed for budget-minded, space-conscious consumers. IKEA furniture will not be passed down from generation to generation as an heirloom, but it will probably fit neatly into a tiny SMDC condo.

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This is not some hesitant test of the Philippine market: IKEA is building a 65,000 sqm store that will be the company’s largest... in the world. IKEA is reported to have budgeted P7 billion for the construction, setup, and initial stocking of this store.

While this store is massive, IKEA’s partnership with SM should give competitors cause for concern: the furniture giant will not lack for opportunities to become a repeat anchor tenant for SM in any of its malls in other dense population centers like Cebu or CDO. I think Wilcon [WLCON 20.70 3.72%] investors will want its management team to probably take a closer look at IKEA to understand the threat that it poses.

Remember how WLCON’s COO brushed IKEA aside while demonstrating a worrying lack of sophistication with respect to their knowledge of their competitor’s product roster and potential consequences for WLCON? Well, IKEA didn’t get to be this big by selling uncompetitive products in competitive markets, so it’s probably a mistake for anyone in the furniture, housewares, or appliances businesses to take this event lightly.

The one major weakness that IKEA has is that it is not known for its online shopping experience; delivery is not a part of IKEA’s core competency, and that’s going to (maybe) be a vector that IKEA’s competitors can use to defend market share and territory. Interesting times ahead!

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