Dive Brief:

• Home furnishings retailer Ikea Group signed an agreement to buy 100% of on-demand services company TaskRabbit in a deal expected to close in October, per a press release. After the acquisition, TaskRabbit will continue to operate as an independent company.
• TaskRabbit connects its users with skilled “Taskers” who can perform activities like furniture assembly, moving and packing, general handyman work and home improvements. The deal would ease giving Ikea customers access to TaskRabbit Taskers for jobs such as putting together the customers’ latest purchase from the retailer. TaskRabbit is active in 40 cities around the U.S. and U.K. Last November Ikea stores in London ran a pilot with TaskRabbit for furniture assembly services.
• Once the deal is complete TaskRabbit will be able to continue partnering with other retailers and commercial partners and it will remain headquartered in San Francisco.

Dive Insight:

Mobile and digital technology are driving growth in the so-called on-demand economy, in which consumers can easily order food, hire a driver or find a short-term rental. However, as the number of startups proliferates, it is getting harder to become the next Uber or Airbnb, which is why some of these companies may be looking to get acquired.

Savvy marketers recognize they need to be a part of this space if they are going to build loyalty with smartphone-wielding consumers. However, most partnerships to date have been around co-promotions or for on-demand home delivery, which makes Ikea's decision to acquire TaskRabbit interesting. It is reminiscent of Lowe's 2014 acquisition of Porch.com, a website for hiring someone for a home project. 

There has been a trend of retailers, and other big brands, buying startups with varying success. Target spent a couple of years acquiring four startups specializing in data analytics in a strategy it called “aqui-hires” as a way to bring both technology and talent into the company. Walmart bought upstart e-tailer Jet, but ended up cutting a large number of its Silicon Valley personnel when the integration didn’t go smoothly.

For this deal, Ikea and TaskRabbit seem like a perfect fit. Instead of adding a competitor such as the Walmart deal with Jet, or adding expertise outside of the core business like Target’s aqui-hire strategy, Ikea is making a move to ease a customer pain point. It offers a budget-friendly option in home furnishings, but products are sold unassembled leading to frustration for some consumers. Enter TaskRabbit Taskers with expertise and experience assembling Ikea furniture. The deal gives Ikea an instant value-add service to its retail operations in the cities where TaskRabbit is active.