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Klarna, the Sweden-based start-up payment company that helps online shoppers find point-of-sale financing, has hired another strategic investor: H & M fashion retailer is taking a $ 20 million stake in the company. an omnichannel payment service at H & M's physical stores – covering 4,800 stores in 70 markets – and in its online storefronts.
According to Klarna, the agreement will cover in-store, mobile and online "frictionless" payments throughout the company's footprint, an improved delivery and return process, and more flexible payment options, including Subsequent payment "Try before you buy" via the H & M app and its Club loyalty program. The first phase of the partnership will be operational in 2019 on the Swedish national market of H & M before its global deployment.
The companies do not disclose the valuation of this investment, but a source close to the transaction claims that the $ 20 million equates to "far less than one percent of the company." In some contexts, Klarna has been valued at $ 2.5 billion in 2017, a year when he made a series of investment announcements. These included a $ 225 million stake in Anders Holch Povlsen (owner of the fashion conglomerate Bestseller), the world's largest investor in Klarna; strategic participation of the Visa credit card giant; and a $ 250 million investment from the PE company, Permira. (Previous investors have included Sequoia, Northzone and IVP.)
We heard that Klarna was also considering an IPO as a new liquidity event, although a spokesman declined to comment on this when it was asked today.
For H & M, this initiative aims to give the company a bigger boost in digital sales. Some retailers have made selling online, and more specifically mobile, the cornerstone of their sales – and there are indeed a number of companies that have established a presence only online games such as Farfetch, Matches and ASOS.
"We are impressed by Klarna's achievements to date and we will now work together to enhance the modern shopping experience," said Karl-J ohan Persson, CEO of H & M, in a statement. "This strategic partnership between the H & M group and Klarna is based on a single, unified goal of creating great customer experiences."
H & M has spent the bulk of its investments and has focused on its physical stores over the years, which partly explains the current trend in purchasing, which encompasses not only the most before Web savvy, but also ways to pay at the checkout using your mobile phone – has potentially gone through.
It is not clear that an impact ignored by the new sales channels and by better digital experiences has had on the company, but H & M has recorded a significant fall in share price over the past year. This investment, as well as its benefits, could potentially help boost confidence, and perhaps sales, in the marketplace at a crucial time.
"At H & M, we are very excited about this partnership. We want to allow customers to roam freely between different channels and to choose the type of shopping they wish and experience our offer, online and in-store, "said Daniel Claesson, head of commercial development of the H & M group, in a statement. "This partnership will bring tailored payment solutions to our customers and adapt to changing business habits and needs. This includes the opportunity to try before you buy, which is very relevant for online fashion retailers and pay with their mobile phone directly via the H & M app, both in-store and online. "
Klarna was already working with retailers, including the range of brands belonging to Bestseller, Povlsen, as well as Ikea and ASOS. So it's a safe bet for H & M to try something new. Klarna herself began by focusing on point-of-sale financing, and that's always what makes her famous. However, in 2017, it also obtained a full banking license, which allowed it to integrate more financial services (including credit products with Visa), thus opening the door to many other services offered to his clients.
E-commerce, however, still represents only a very small percentage of retail sales, accounting for only about 10% this year in developed markets such as the United States, and much lower elsewhere. So there is still a long way to go to exploit the market and create services for traditional businesses, an opportunity to be seized by Klarna.
"The retail business is changing and the future of fashion retail is high tech, generating highly tactile experiences for customers. No matter when and how customers want to shop, we have to be there for them, "said Sebastian Siemiatkowski, CEO and co-founder of Klarna, in a statement. "Customers will not forgive unnecessary complexity or when their retail experience will not leverage the knowledge available to make their engagement smart, personal and simple."
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