The company wants to be a destination for more than payments.
Klarna is known for providing tools to facilitate purchases. Now it wants to be more known as a place to find products to buy, too.
The company on Wednesday rolled out a number of new shopping features under the heading of Klarna Spotlight, including search, shoppable video and a creator platform. While Klarna already had shopping, it is not as widely known as a destination for browsing and discovery as it is for payments. In particular, its buy now pay later function, which allows users to pay in installments, became popular during the pandemic, though it offers multiple ways to pay.
CEO Sebastian Siemiatkowski said in an announcement on Wednesday that “payments solve only part of the puzzle,” and the new features will help it evolve beyond them. The company wants to become a “true shopping utility for consumers and growth partner for retailers” and become a “starting point” for purchases.
“The new products revealed today mark a major milestone in Klarna's evolution to becoming a place where consumers and retailers can now search, discover, and create,” Siemiatkowski said. “From inspiring product discovery all the way to delivery tracking, digital receipts and seamless returns – we are powering ecommerce and accelerating trade across the world."
Here’s a look at the new features:
Klarna’s search tool is built to help users the best price for a product. The unbiased tool compares prices across thousands of websites. Results are listed in an “orderly overview,” the company said, with both new and pre-loved items displayed. Items can be filtered by color, size, features, customer ratings, store availability and shipping options. A price range can also be displayed.
The search tool is available in the Klarna App and on Klarna.com. But there’s another area where it could have a bigger impact: The functionality will also be available in a new panel within the company’s in-app browser. This means information will appear when a user is browsing a product page, including whether other retailers are offering a better price, faster and cheaper delivery options or different sizes and color. At checkout, the tool will also look for and apply available coupons.
Here’s how the company is positioning it: “With over 23 million monthly active users on the Klarna App, the search and compare tool becomes a key acquisition channel for merchants, boosting their visibility, traffic, and sales with a captive audience.”
Klarna is also bringing content into the shopping experience through shoppable video that is available under the Watch and shop widget in its app. This feature will allow users to watch unboxings, tutorials and reviews from thousands of videos made by brands and creators. The items that appear can be shopped directly from the videos.
Brands can either share existing videos or make new content for the platform. They can also partner with Klarna to be featured in curated content and campaigns. Brands using the feature to date include e.l.f. Cosmetics, Keys Soulcare and Haus Labs by Lady Gaga.
“Our mission at Haus Labs is to deliver supercharged, clean artistry makeup, powered by innovation,” said Lady Gaga, in a statement. "Haus Labs is excited to launch shoppable video content in the Klarna App, empowering our community of artists and creators to express themselves through high-performance makeup and their unique artistry, while engaging with millions of fans around the world.”
Along with shoppable video, Klarna has a new hub for the creators who make content. Klarna says the platform provides a “one-stop shop” for creators to connect with retailers. It provides tools that automate initial outreach, partnerships, as well as tracking sales and commissions.
Klarna touted scale for both sides of the equation. Creators can directly access retailers, who are making available “hundreds of thousands” of products to be recommended to audiences. For retailers, the company says the platform provides a pool of 500,000 creators, and tracking for performance.
Klarna is rolling out an upgraded carbon emissions tracker that provides insights into the environmental impact of purchases. It displays emissions set free for over 50 million items throughout the product’s lifecycle, from the sourcing of raw materials to recycling.
Klarna is also adding a new donations feature to its app. This allows shoppers to donate to vetted organizations that are focused on planet health. The feature also allows users to track the aggregate volume of donations made, and learn more about the nonprofits.
This isn't the first time we've seen a shopping rollout from Klarna this year. The new features follow the release of Klarna’s Virtual Shopping feature earlier this year. Here’s how we described it at launch:
The service connects online shoppers with experts at brick-and-mortar stores who can offer a closer look at the items they are browsing. Through the newly-launched, merchant-facing Klarna Store App, members of an in-store team can send photos and video of products, and present live demos.
This feature gelled with a company that integrates with many in-store retailers, and, judging by the banners on view during a recent trip to the mall, sees opportunity to expand in that area.
The new features, however, are more tied to direct ecommerce purchases by consumers through Klarna, and less about providing additional services to its merchant partners. Of the new features, tying search to price feels particularly natural for Klarna, given its reputation for payments and its existing goal of providing a way to shop the internet from its app. The new browser panel in particular, stands out as a tool that could help shoppers feel like they have an advantage. Shoppable video and a creator platform feel very 2022, and they may well prove to be table stakes for ecommerce going forward. The scale of content and creators at launch is also noteworthy. But it’s less clear how Klarna plans to reach shoppers with the content that they want to see. Remember: TikTok’s power is just as much about the “For You” algorithm as it is about creators and short-form video.
Klarna is making these additions at a time when it has faced a pullback. After expanding quickly to meet demand for buy now pay later during the pandemic, the company’s reported losses in the first half of 2022 that were three times as high as the year prior, even as its revenue jumped 24%, CNBC reported. It has made two rounds of layoffs, including one that accounted for about 10% of the company’s team. It also raised funds at a valuation that was 85% lower than its prior round. The company had been profitable until 2019, when it mounted an aggressive US expansion.
At the same time, buy now pay later as a whole has attracted scrutiny. In September, the US Consumer Financial Protection Bureau expressed concern about rising late fees, and growing use of BNPL for routine purchases, while promising to bring regulation.
It’s a moment when creating new revenue streams and leaning into less controversial business lines may be necessary.
BlueSnap CEO Ralph Dangelmaier talks about the importance of strong payment infrastructure.
Ecommerce touts instantaneous buying and convenience among its many benefits, but the truth is that consumers can be fickle on the way to completing checkout.
Once their cart is full, they want to be able to choose from a multitude of payment options. They also want checkout to happen quickly. If those aren’t provided, there’s always the danger looming that a second thought or distraction will creep in, leading a cart to be left waiting.
“In today’s crowded retail landscape, there is little room for error when it comes to ensuring that purchases are not only initiated effectively but followed through until the very last step,” said Ralph Dangelmaier, CEO of BlueSnap, a payment orchestration platform. “How shoppers experience your brand is now more important than ever, because even the slightest inconvenience at checkout can result in both customer and cart abandonment.”
To avoid losing customers – and sales – before the final payment is completed, Dangelmaier said several gaps in the ecommerce experience need to be considered.
For one, the end matters. It’s worth remembering that when it comes to a sale, closing the deal is just as important as an attractive entrance. For brands and retailers, driving traffic to a site is often a primary focus. After all, more traffic means more chances for sales.
“But these efforts are effectively useless if customers are met with a confusing, faulty checkout experience,” Dangelmaier said. “If customers are making it to checkout, it’s up to the retailer to ensure the process is seamless enough that people don’t abandon their cart at the last second.”
As retailers see a few customers trickle out here and there, it may seem insignificant. But taken together, the lost sales can add up to big deficits, Dangelmaier said.
For global retailers, it’s also necessary to localize payment options to a specific area. If a customer goes to checkout and doesn’t see a payment method they regularly use, they may be more likely to abandon cart.
“By offering preferred payment methods, a range of languages and local currencies, these sales are more likely to be completed, while also resulting in higher levels of customer satisfaction,” Dangelmaier said.
It’s also important for retailers to keep up with changes in payment methods. To keep up with the pace of innovation, they should also add alternative payments, such as eWallets, buy now pay later (BNPL) and crypto.
Increasingly, the ability to access a multitude of options is part of a shopper’s expectations. According to a PYMNTS survey, 45% of shoppers said they want the ability to use their preferred payment method while shopping online.
There’s lots of talk about frictionless experiences in commerce, and making payments easy is part of that. After all, consumers want to complete their purchase in as few steps as possible. But it’s made possible by having a payment infrastructure in place, Dangelmaier said.
“A strong payment infrastructure must be able to capture, authorize, and protect each sale while providing the greatest amount of ease possible to the shopper,” Dangelmaier said. “From a brand perspective, having a durable payment infrastructure in place also aids in achieving higher authorization rates, and avoiding cross-border fees.”
Within this infrastructure, there are complex and interwoven systems working under the surface to make things simple for the customer. Having the right payment options in place is just one piece of what’s required. Brands and retailers are also growing the number of channels on which they are selling, from web and mobile to marketplaces and social media. So it’s important that all payment options are offered across each channel in order to keep them consistent, said Dangelmaier.
“In establishing this payment infrastructure, retailers must hold a strong understanding of payment orchestration, which simplifies payment processes by integrating service providers, acquirers, gateways and banks within one consolidated layer of technology,” Dangelmaier said. “In streamlining payment flow through the integration of multiple payment methods, payment orchestration provides a higher likelihood of customer satisfaction in the checkout process that directly translates to a higher degree of brand loyalty and retention.”
Payment orchestration offers access to a wide range of payment services providers, and support for cross-border sales. It also reduces the risk of declined payments and other failures by directing all transactions to the highest-performing payment processing provider.
By bringing all of the different sides of the payments equation together, retailers can present a unified experience for consumers. While there may be a lot happening behind the scenes, for the customer, this ensures checkout is quick and easy to complete. It’s a way to stand out at the end of the sale, just like retailers want as they seek to bring a customer to their site.
“Payment orchestration is key to making sure shoppers are experiencing a continuous, technologically ‘with it’ brand,” Dangelmaier said.