A well-respected online furniture retailer is teaming up with a stalwart of the gig economy, a broker for people who do household tasks. The furniture retailer gets better customer service; the giggers get gigs assembling furniture. Good deal, right?
Oh, separately, Ikea bought TaskRabbit this week.
Your confusion is understandable. In that first graf I was talking about Wayfair. You know, the world’s largest online-only furniture retailer? Took in $3.4 billion in revenue in 2016? And of course I meant Handy, the international in-home repair and cleaning exchange reportedly valued at $500 million. In May, Handy tied up with the furniture seller, and Wayfair added an option for “one-click installation and assembly” to purchases. All the scheduling and pricing goes through Wayfair, but Handy arranges the actual hex-wrenching.
Ikea’s similar move further validates this weird hybrid business model. The biggest furniture retailer in the world, no qualifiers, with a huge footprint in the real world and a huge footprint in the virtual world just bought an icon of the sharing economy. TaskRabbit isn’t huge, value-wise, but it’s a brand everyone knows. Amazon uses the company for similar services. McDonald’s touts a connection to UberEats. And Best Buy has long deployed its in-house Geek Squad brand to sell, install, and repair everything in your house that’s shiny, metal, or goes click or beep.
What even is this? Bricks-and-mortar plus online retail plus outsourced customer service plus sharing economy…let’s go with “gig-plus” for short.
It works at varying levels of seamlessness. Amazon’s do-you-want-to-buy-help? prompt can feel a little clunky. Wayfair’s is relatively smooth, thanks to Handy’s efforts over the last five years. Ikea won’t spin up until October. “The details of how it will work in practice are still being developed,” says an Ikea spokesperson, adding that the deal marks the “first step for Ikea Group into the world of platform-supported services.”
Gig-plus has advantages for both sides of the partnership. Retailers get to charge more for an added service, and get access to a previously untapped market—people who want to buy big-ticket items but don’t want the hassle of assembly. According to Handy, retailers also see fewer returns, since people are less likely to send something back once it’s built and installed.
Using gig workers helps a corporate bottom line, too. As Uber learned, the workers’ contract status means they serve customers and represent the brand without getting benefits or overtime. Handy’s and TaskRabbit’s giggers set their own rates for these jobs. That might be why Ikea is keeping TaskRabbit as a separate entity, and not monkeying with its other tasks—including, for now, TaskRabbit’s relationship with competitor Amazon.
Even better, companies that traditionally had limited personal contact with their customers get fingertips all the way into their houses. “Online retail is going to grow dramatically in the next decade. It’s under 10 percent now, but there’s no reason it won’t be over 20 percent in five years,” says Arun Sundararajan, a business professor at NYU and author of The Sharing Economy. “Physical-world extensions of digital commerce are going to be an increasingly important part of the retail experience.”
On the gig side of the gig-plus relationship, platforms get stability and visibility. People who might otherwise not try Handy or TaskRabbit are exposed to them via more-trusted brands. (A Handy representative says it’s still too early to know how many of the company’s Wayfair-pointed customers convert to using other Handy services; TaskRabbit didn’t return my request for an interview.)
Also, there’s the money. Amazon’s retail profits are so meager that it might reap bigger margins on services, even after paying a partner such as Handy. Meanwhile, the gig platforms can tie up with someone upstream on home assembly. “There’s a natural synergy between retail and the services needed by retail,” says Sundararajan.
And once Amazon’s in, other retailers see the change in landscape. But building in-home services isn’t easy. “The fact that Amazon is doing this is one of the things that’s created the urgency for other retailers,” says Oisin Hanrahan, Handy’s CEO and co-founder. “But there is a time component here. We’ve invested $100 million over the last five years building out a platform.”
Still, gig-plus feels a little weird—or at least temporary. Part of the Ikea experience is getting lower prices and, sometimes, cheaper materials, in return for assuming responsibility for the last third of traditional retail: fulfillment,…