Hidden Formula Behind IKEA’s Success!

"There are a total of 340 billion trees on our planet Earth, and you’ll be shocked to know that IKEA, the world’s largest furniture brand, uses 1% of them every year. That’s about 30 billion trees annually, or 963 trees every second. But who would believe that this billion-dollar business empire actually started from just a few matchboxes?

The boy who couldn’t even remember names of things — how did that weakness turn into his strength?

This boy’s name was Ingvar Kamprad, and he started his first business at the age of just 6. His family noticed he was quite different from others and showed a natural talent for business. His grandmother gave him 88 Swedish cents, with which he bought 100 matchboxes. To encourage him, his first customer was also his grandmother, who bought one matchbox from him for 3 cents.

People nearby started buying from him too, and soon his first investment tripled, turning into 3 Swedish kronor. It wasn't much, but this experience sparked a passion in him for buying things cheap and selling at a profit. While other children were busy playing, Ingvar was selling various household items, each time multiplying his investment. He never spent the extra money frivolously — he always reinvested his profits.

When he was sent to school, he was diagnosed with dyslexia, a condition that makes reading and memorizing difficult. Even in school, Ingvar continued his trade — selling pens, watches, and belts to classmates. He earned his first major profit by selling 500 pencils in school.

At the age of 17, after completing his graduation, his father gave him money as a gift to register a trading company. In 1943, he registered the company 'IKEA' — the name derived from:

• "I" and "K" = Ingvar Kamprad
• "E" = Elmtaryd (the family farm)
• "A" = Agunnaryd (his village)

This wasn’t a shop or office — just a virtual trading company focused on delivery. Ingvar sold the same items he had been selling since childhood. He packed orders in a small shed-like space. Who knew this little shed would become the foundation of a billion-dollar empire?

In IKEA’s early days, Ingvar imported and sold pens, wallets, and various items. But all these products were also available in physical stores. So people would only buy by mail order if the price was lower or the product was unique.

To solve this, Ingvar began market research, listing items that were cheap to manufacture but sold at high prices. He couldn’t understand why a pen that cost 1 cent to make was sold at 10 cents in stores. He concluded that the real problem was in distribution — the product became expensive by the time it reached stores.

Ingvar realized that to beat market competition, he had to cut distribution and transport costs — something that required planning and effort.

At this point, his catalog didn’t yet include furniture. But after World War II, the Swedish government began building many new homes, increasing demand for cheap furniture. This was the perfect opportunity for Ingvar to include furniture in his product catalog.

Slowly, furniture sales overtook all other items. He sourced cheap furniture from local manufacturers and sold it with a margin. Due to his dyslexia, he couldn’t remember furniture codes, so he gave simple names to items in his catalog, making it easier for both him and customers to remember and order.

Unlike competitors who listed complex codes, IKEA products had unique, attractive names — this made ordering easier and boosted sales.

At the time, mail-order companies competed by offering the lowest prices. But cutting prices often meant compromising on quality. Many companies did this, ruining the image of mail-order businesses.

That’s when Ingvar decided to open IKEA’s first physical store, where furniture could be seen and touched — reducing delivery costs and improving customer trust. As a marketing move, he also offered free Swedish bus rides to the store.

When the first IKEA store opened in 1953, it was more crowded than expected — nearly 1,000 people stood in line. Furnishing government-issued homes had become a need, and IKEA’s strategy was working.

He still mailed catalogs, but now people came directly to the store too — making IKEA the first mail-order company with a physical store.

Ingvar even added a swimming pool near the store, turning IKEA into a tourist spot where people could enjoy and shop together.

As IKEA rapidly grew in the 1950s, other furniture retailers began seeing it as a threat. They couldn’t compete with IKEA’s low prices. So they tried to block IKEA at trade fairs, where IKEA stalls always attracted the most crowds because they displayed actual furniture, unlike others who only showed catalogs.

Next, the competitors got IKEA’s product prices banned from catalogs — since they were the lowest. In response, IKEA launched its own trade fair.

Dealers even threatened IKEA’s suppliers — saying they’d stop buying if they sold to IKEA. Scared, many suppliers cut ties with IKEA. This directly affected sales.

But Ingvar came up with a new plan. While other retailers paid suppliers in 3 months, IKEA offered payment in just 10 days. Suppliers started supplying to IKEA secretly at night. IKEA also began designing its own products and outsourced wooden chairs from Poland, surprising competitors.

This boycott only made IKEA stronger.

One day, an employee noticed a customer struggling to fit a table into his car. The employee suggested removing the table legs. That idea changed IKEA’s future.

Detachable table legs made the furniture compact, easier to store and transport, with fewer damages, and customers could take it home the same day. This led to flat-pack furniture, a concept pioneered by IKEA — now used worldwide.

Manufacturers began designing furniture with properties to enable easy disassembly and low-cost delivery.

After the success of the first store, Ingvar opened a larger store outside Stockholm — 3 stories tall and the size of eight football fields. He carefully studied customer psychology, making a layout with a single entrance and exit, forcing customers to pass through the entire store, increasing purchases of impulse items.

However, the store would go empty during lunchtime. Ingvar noticed that customers would leave for lunch and not return. So he opened an in-store restaurant, keeping people inside longer.

His strategy worked. Customers could now shop and eat without leaving. This business model was now ready to be copied worldwide.

In 1965, a new store launch attracted 18,000 people on the first day. By 1973, IKEA was extremely successful. Ingvar wanted his brand to live on after him. But Sweden had very high inheritance taxes.

To avoid heavy taxes, he hired lawyers around the world to build a complex network of shell companies, foundations, and trusts in tax havens. After 7 years, IKEA’s corporate structure was so complex that taxing it became nearly impossible. This drew allegations of tax evasion, but legally, no one could stop him.

In the 1980s, IKEA faced another controversy: some factories in East Germany, where IKEA furniture was made, allegedly used forced prison labor. Though IKEA didn’t operate those factories directly, it was blamed. Once confirmed, IKEA’s management issued a public apology.

In the 1990s, over 70 new stores opened. By 2008, IKEA had become the world’s largest furniture company. When Ingvar Kamprad passed away in 2018 at the age of 91, IKEA had 473 stores worldwide, launching over 2,000 new products every year.

Even today, every product is given a Swedish name — a tradition that began because of Ingvar’s dyslexia.