MEET BILLY

BILLY is a bookcase sold by the Swedish furniture company IKEA. It was developed in 1979 by the Swedish designer Gillis Lundgren, who sketched it on the back of a napkin, worried that he would forget it.

IKEA claims on its website that a Billy bookshelf is sold every five seconds. Every three seconds, another one rolls off the production line of the Gyllensvaans Mobler factory in Kattilstorp, a tiny village in southern Sweden.

The Billy bookcase is claimed to be the most successful piece of modern furniture – more than 120 million pieces have been sold since its inception 42 years ago.

The bookcase has become so ubiquitous that in 2009, Bloomberg created the ‘Billy Bookcase Index’ to

compare its price in different countries around the world to illustrate exchange rates.

HOW BILLY FITS IN IKEA’S BUSINESS MODEL

“Why are beautiful products only made for a few buyers? It must be possible to offer good design and function at low prices.” These are the words of the famous IKEA founder Ingvar Kamprad, and the basic philosophy by which IKEA operates. A major reason people flock to IKEA is its price point - IKEA prides itself on being affordable, not cheap.

The Billy bookcase is perhaps the most typical Ikea product in this regard.

The reason for the bookcase’s widespread use is twofold: its clean-lined and everlasting design and IKEA’s penchant for relentlessly finding ways to cut costs without reducing the quality of its products – The Billy does not look like it has changed much since it was launched in 1978, yet it costs 30% less. That is partly due to constant and minor changes in both product and production methods.

This demonstrates that innovation in the modern economy is not just about glamorous new technologies, but also boringly efficient systems.

BEHAVIORAL ASPECTS THAT WENT INTO DESIGNING BILLY

The Billy was designed by Gillis Lundgren, who mentioned that his aim was to create “simple, practical and

timeless” pieces. When designing the product, emphasis was given to functionality and flexibility, recognizing that different homes had different requirements and space availability.

In 1956, IKEA founder Ingvar Kamprad introduced “flat packing”, which is almost all of its furniture products, including the Billy come packaged in a set of flat boxes. You have to assemble the items yourself or hire someone to do it. And because the company uses particleboard, medium-density fiberboard (MDF) and other lighter, engineered products, IKEA is able to manufacture, ship and store its BILLY units much more inexpensively than if it instead tried to sell a pre-assembled bookcase made from true wood.

This makes BILLY one of the most affordable—if not the most affordable—bookcase in the market.

Another cool aspect about the Billy is that it’s a bare-bones, functional bookshelf - if that is all you want from it, or it is a blank canvas for creativity.

Innovating the Billy is all about working within the limits of production and logistics and finding tiny ways to shave off some cost, all while producing something that looks innocuous and does the job.

UNIT ECONOMICS OF BILLY

To fix the price of the Billy, the design team works backwards from a price tag – determining a price to meet, designing and sourcing materials to make that price possible.

The major reason that Billy is so inexpensive is that it’s unassembled, making it easy to ship. Shipping bookshelves in pieces and parts approximately halves the size of the parcel, and Ikea can ship double the number of bookcases they would if these were delivered fully assembled.

IKEA said in 2020 that it sells a Billy every 5 seconds, which makes it approximately 6.5 million bookcases sold in a year. Also, the average price of a Billy is $36, according to data collected from 40 countries. According to this, IKEA makes around 230 million USD in a year from Billy’s bookcases.

IKEA sold goods worth around 25 billion USD in 2020. Therefore, Billy makes up approximately 1% of the revenue generated by IKEA by the sale of goods, which is not bad for a humble bookcase, keeping in mind the wide variety and prices of goods IKEA sells.

The prices of Billy are also low because of the speed at which it is assembled and the sheer economies of scale.

Look at Gyllensvaans Mobler which produces these bookcases: compared to the 1980s, it is making 37 times as many bookcases, yet its number of employees has only doubled.

Edited By Mayank Choudhury

CITATIONS

• “Celebrate 40 Years of the Billy Bookcase.” IKEA, https://www.ikea.com/in/en/ideas/celebrating-billy-the-original-shelfie-bookcase-puba12f95a1
• Harford, Tim. “How IKEA’s Billy Bookcase Took over the World.” BBC News, BBC, 27 Feb. 2017, https://www.bbc.com/news/business-38747485#:~:text=The%20Billy%20bookcase%20is%20perhaps,bad%20for%20a%20humble%20bookcase
• “Billy (Bookcase).” Wikipedia, Wikimedia Foundation, 20 Dec. 2021, https://en.wikipedia.org/wiki/Billy_(bookcase)
• Book Extract: How Billy Bookcase Shaped IKEA … - News.com.au. https://www.news.com.au/lifestyle/home/interiors/book-extract-how-billy-bookcase-shaped-ikea-and-our-modern-economy/news-story/1a73844fbd9ca47928cca599693a7652