Closing the Loop: Adapting a Circular Business Model for IKEA Taiwan

Abstract

This master’s thesis investigates how a circular “Refurbish & Resell” business model can be successfully implemented on the Taiwanese home furniture market, taking economical, environmental, and social aspects into consideration. The objective is to formulate a recommendation and implementation plan for IKEA Taiwan that aligns with IKEA’s strategy regarding sustainable and circular practices, as well as contributing to the field of circular business model implementation within the furniture industry. Data was collected through means of interviews, a survey, a pilot project, and secondary sources. The interviews showed that other IKEA entities have developed a variety of different Refurbish & Resell business models that can be drawn upon. For Taiwan specifically, the survey showed that higher income does not correlate with higher WTP with regards to a proposed Refurbish & Resell offering, but rather younger and lower income consumer groups are recommended target segments for the new offering. Opportunities connected to the Refurbish & Resell business model include low labor costs in Taiwan, franchisee independence in operating new business models while challenges include a lack of interest in second hand among Taiwanese consumers. The business model was also found to be closely aligned with IKEA’s overall strategy of environmental and social governance. In the short term, IKEA Taiwan should focus on continuing to develop the pilot project, outsource refurbishment, and develop the technical infrastructure that allows for convenient buy-back operations. In the long term, refurbishment should be done in-house to minimize costs and environmental impact of logistics.