IKEA Acquires Logistics Tech Firm Locus to Boost Online Sales

IKEA has acquired US-based logistics technology company Locus. The Swedish furniture retailer said the move would make deliveries smoother and faster as it invests in expanding online sales.

This acquisition complements a $2.2 billion investment by Ingka Group - the largest IKEA franchisee into the US market, where it competes with Wayfair and Walmart while also dealing with higher import tariffs that are driving up costs. IKEA did not reveal the deal’s financial terms. Reports indicate that Locus was valued at $300 million in its last funding round in 2021.

IKEA expects that integrating Locus will simplify logistics and reduce global delivery costs by an estimated €100 million ($117.41 million) annually.

Locus uses artificial intelligence to group orders and predict optimal delivery routes, minimizing the time vehicles spend in traffic, a process that IKEA workers currently handle manually, Parag Parekh, chief digital officer at Ingka Group, told Reuters.

The technology will also allow IKEA to offer more flexible delivery windows, provide live tracking for customers, and speed up deliveries. The company plans to pilot the system in the U.S. and U.K. before expanding it globally.

“Speed is one aspect, but more importantly, it’s about flexibility, tracking, and ultimately improving the customer experience,” Parekh said.

Before the all-share acquisition by Ingka Investments, Locus’ shareholders included Singapore’s sovereign wealth fund GIC, as well as private equity firms Alpha Wave, Tiger Global, and Qualcomm Ventures. Under the deal, Locus will continue to operate independently and serve clients beyond IKEA.

Known for its large suburban stores with colourful displays and maze-like layouts, IKEA has shifted focus toward online retail over the past five years and invested in smaller city-centre stores to appeal to younger, urban shoppers.

Online sales now account for 28% of IKEA’s total retail revenue in the 2024 financial year, up from 11% in 2019.

The Locus acquisition follows Ingka Investments’ purchase of a Manhattan building for $213 million, signalling IKEA’s commitment to U.S. expansion despite higher tariffs on imported furniture.

“While macroeconomic conditions create uncertainty in the coming quarters, as a company, we remain committed to the U.S. market,” Parekh said.