Klarna, a payment app startup from Sweden has joined hands with clothing brand H&M. The Swedish clothing brand is investing $20 million in the startup. In return, Klarna will be revamping H&M’s payment system.
The payment app will be providing its service to enhance the payment system in 4800 physical H&M stores spread across the globe. Klarna will also be providing support to H&M’s online stores.
The startup says it will be providing smooth “frictionless” services for many H&M services across the supply chain. These services will include an improved return and delivery process, more flexible payment solutions for customers, including “try before you buy” pay later option.
The service will be provided via the H&M app and its Club loyalty program. The partnership’s first phase will go into effect from 2019 in both parties’ homeland of Sweden. This will serve as testing ground.
Once the first phase has been successful, the app will go live across all H&M stores. According to close sources, the $20 million investment is less than 1 percent of H&M’s total net-worth.
Klarna was valued at $2.5 billion last year. 2017 was a huge year for the payments startup. It received strategic partnership from Visa, a $225 million investment from fashion giant Bestseller’s owner Anders Holch Palverson, and a quarter of a billion dollars from Physical Education organization Permira.
There are rumors of Klarna going public, but the company refused to comment. Klarna has a lot of experience in creating custom finance options for online retail stores. It has previously worked with brands such as ASOS and IKEA.
The payment startup was well known for its point of sales financial services, but since obtaining a banking license in 2017, it will be able to expand its services for its customers. The partnership with Visa will also help in this regard.
This collaboration will allow H&M to become a strong force in e-commerce sales. The whole world is going digital, brands like ASOS, Bonobos, and Boohoo have made their revenue via online stores only.
This partnership was, therefore, a natural step forward for the Swedish clothing brand.
CEO of H&M Karl Johan Persson said, “We are impressed with what Klarna has achieved to date and now we will work together to elevate the modern shopping experience.”
He further added, “This strategic partnership between H&M group and Klarna is based on a joint relentless focus on creating great customer experiences.”
H&M is slowly catching the competition by slightly deviating its focus from its physical stores. The company now wants to offer its customers with a more responsive and interactive web experience. It also wants its customers to be able to make payments at their physical stores using just their smartphones.
The clothing brand has seen better days, that’s for sure. 2018 has been especially cruel to H&M, as it could not manage to sell unsold stock, so its shares dropped massively in the second quarter.
E-commerce is still, believe it or not, a very niche market. If payment startups like Klarna keep popping up to streamline payment options for both e-commerce sites and brick n mortar stores, there is no way the customer won’t win.
And a win for the customer means a win for the business.
Hopefully, this new friendship will be able to shake things up a bit and give the company a fresh start, which it desperately needs.