In TaskRabbit’s Sale to Ikea, Lessons for Retail Tech’s Future
“Gig economy” startup TaskRabbit has sold to Ikea, the furniture maker whose customers often turned to TaskRabbit’s online marketplace for help. It will be important to watch how other traditional retailers like Walmart and online sellers like Wayfair respond in the broader competition for tech talent and platforms.
This is now a world where retail is defined by two categories: Amazon and everyone else. Netherlands-based Ikea’s acquisition of San Francisco-based TaskRabbit brings the purveyor of cookie-cutter furniture and other in-home trinkets a decade-old business with experience in the online sharing economy. Ikea sees the acquisition as a way to keep up with the “urbanization and digitalization” that is changing the retail industry, according to a news release.
“An acquisition of TaskRabbit would be an exciting leap in this transformation and allows us to move forward with an even greater focus on innovation and development to meet changing customer needs,” Jesper Brodin, Ikea’s CEO and President, said in the release.
Terms of the deal weren’t disclosed; TaskRabbit had raised more than $37 million since its founding in Boston in 2008 (originally called RunMyErrand). Leah Busque, the company’s founder and former CEO, joined venture capital firm Fuel Capital this summer.
It’s not clear exactly how Ikea plans to use TaskRabbit, which connects users with contractors it calls Taskers who do anything from assembling Ikea furniture to doing household handiwork. But Ikea says TaskRabbit will operate independently, and will still offer its services to other retailers. Ikea, which has 357 stores in 29 countries, says it plans to continue offering consumers and Ikea customers TaskRabbit’s services in London and the 40 U.S. cities the app operates in currently, and may expand to more countries.
Meanwhile, Seattle-based Amazon is the world’s third-largest retailer by revenue, according to Forbes, and increased its presence in physical retail dramatically with its acquisition of Austin, TX-based Whole Foods earlier this year. The noteworthy thing about Amazon is not necessarily anyone’s attempt to compete with the diversified retail giant, but many other companies’ efforts to mimic Amazon’s success navigating both the online and physical retail worlds. Amazon has stretched into the physical world with its purchase of Whole Foods and plans for other physical stores, as well as its grocery delivery service.
Whether other retailers try to make acquisitions or form partnerships similar to that of TaskRabbit and Ikea will be a point of focus. Earlier this week, Walmart announced it is using Facebook’s business collaboration tool, Workplace. And plenty of other companies offer real-world services that tap into consumers who seek out services online. Chief among them is Thumbtack, a San Francisco-based company that lists professionals working in various industries, from plumbers to consultants. The company is a search engine optimization specialist, pushing the professionals who list themselves on Thumbtack up in Web search results.
Could another retail giant find interest in teaming up with a company like Thumbtack, which has a similar offering to TaskRabbit? It seems a possibility, given Ikea’s interest. Or, might retailers prefer a more niche delivery service, such as a Favor, Drizly, or DoorDash?
The delivery industry has had to temper itself after finding rapid interest. Bloomberg Technology noted last year that TaskRabbit hadn’t grown as fast as some services businesses, such as Thumbtack or Uber. Meanwhile, Austin-based Favor closed all of its operations outside of Texas in 2016. One of TaskRabbit ‘s investors told Bloomberg that the company wasn’t having trouble growing, but instead was intentionally retrenching itself to keep the business healthy. Similarly, Favor now has plans to potentially expand again outside of Texas after becoming profitable.
The decision to retrench seems to have worked out for TaskRabbit. We’ll be watching out for whether other large retailers make any similar moves, and how they plan to innovate in an increasingly digital economy.