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H&M decide free shipping is unsustainable for profitability

By Chris Dawson April 11, 2019 - 11:47 am

H&M, a retailer with a presence in over 70 countries around the world has started to limit free shipping. H&M have a loyalty membership in 16 of the countries that they operate in but have started to introduce minimum order levels for members if they want free shipping.

H&M have two membership levels and in the UK basic members have to spend £20 to get free shipping or free click and collect or in Germany €22. In their home country of Sweden the minimum order level is roughly equivalent and is set at 200 Swedish crowns.

Members will be split into either a basic member or a plus member based on how many points they have earned in the past year, with H&M Plus Member Benefits giving the basic member benefits plus surprise Plus offers, special access to limited collections, pre-access to events, and exclusive experiences.

£20 isn’t exactly a lot to spend in order to qualify for free shipping, but it’s sign that retailers can simply no longer afford to offer carte blanche free shipping even to their club members. With the high street in decline, as evidenced this week by Debenhams slide into administration, retailers have to take a prosaic view and determine what’s profitable for the long term and if free shipping for low value orders is sustainable.

It’s worth noting that H&M are retaining free returns for all orders regardless of order size so this is yet another cost that has to be built into their price models.

Free shipping was once hailed as the ultimate and must have experience for retailers, both on their own platforms and on marketplaces. Originally it was touted that free express shipping would be the norm, followed by free economy shipping with a paid for express option. As profits tighten and cost continue to rise it’s likely that more retailers will follow H&M and limit free shipping, whether express or economy, will be tied to minimum order sizes that make free shipping a sustainable offering rather than a de facto consumer expectation.

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