Klarna wants a bigger role in e-Commerce

 

Klarna is not a new name in e-Commerce. Founded in 2005 in Sweden, this fintech company has been providing online payment options to shoppers and businesses for over a decade.

 

Klarna is currently available in 45 countries, including the US, UK, Canada, France, Australia, Germany, Spain, Switzerland and Italy. The company reports 2 million transactions per day amongst its 150 million active users.

 

As an alternative payment method like Paypal, Klarna offers various services to its customers. Shoppers can choose whether they want to pay upfront for their purchases, or pay later (buy now, pay later, or BNPL).

 

Those who go for the latter option have the further choice between paying in full in 30 days, or splitting their purchase into four instalments with one due every two weeks. For shoppers’ convenience, the payments are deducted automatically from their account, and, if they’re within the deadline, these instalments are interest-free.

 

Whichever option customers choose, merchants don’t have to wait for their money. Klarna pays them the full amount right away, and takes care of collecting the rest of the payment from the customers for itself. For merchants, this service is a win-win: they get their money at the start while their customers can enjoy the flexibility of later payments.

 

In addition, Klarna provides select merchants with marketing solutions, including shoppable content and ads.

 

 

Screenshot of klarna.com’s homepage

 

 

Issues with Klarna

While the above sounds rather positive, financial advisors warn consumers about the dangers of using Klarna. The buy now, pay later option lures consumers into a false sense of security and encourages them to spend money they don’t have. Overspending can lead to serious debt, especially if Klarna customers don’t have the required funds in their account when their next payment is due.

 

Although the company advertises itself as providing interest-free payments, Klarna charges various other fees, including a late payment fee, reminder fee, late payment interests, debt collection fee, legal costs, etc.

 

In fact, the company has been severely criticised for its invoicing practices (reminder invoices with fees are being sent out without first having sent a regular invoice), lax attitude to the protection of privacy as well as identity theft and fraud.

 

 

e-Commerce by Klarna

Klarna has already started to launch services beyond payments. For example, the Discovery Shopping Feed, an AI-powered feature of the Klarna app recommends products to users based on previous interest.

 

 

Screenshot of klarna.com/de displaying Klarna’s e-Commerce offering

 

 

In line with the company’s desire to widen its offering in e-Commerce, Klarna is now introducing three new services to its customers in various parts of the world.

 

 

Klarna Shopping Lens

This new feature allows shoppers to upload a picture of a desired product to Klarna. Thanks to the help of an AI application, Klarna transforms the picture to a search term and finds out where these or similar products are available. Since Klarna already has an internal price comparison tool, shoppers can get a selection of shops ranked according to the best available deals.

 

Klarna customers in the US, UK, Germany, Sweden, Norway and Denmark can now use the Shopping Lens to locate desired items in shops.

 

 

Barcode scanner

Another new feature allows customers in physical shops to scan barcodes of over 10 million products with their Klarna app to get detailed product information, customer reviews, and even if the products are available online for a better price.

 

While Klarna claims that the barcode scanner provides the advantage of online searchability to physical retailers, it certainly seems unfair to the merchants if the app advises customers to take their business elsewhere. On the other hand, this feature may help create an incentive between physical retailers to offer the best deal to consumers.

 

Shoppers in the US, UK, Norway, Sweden, Denmark and Germany get to use this feature at this time.

 

 

Shoppable videos

Already a success in the US, Klarna brings the idea of shoppable videos to the UK, Germany and Sweden. In these countries, Klarna app-users can now view all kinds of videos, including tutorials, unboxing, and product reviews by brands and international content creators hand-picked by Klarna.

 

The videos are curated to the taste of individual shoppers, thanks to another AI application. Klarna reports that the initial rollout in the US has been a big success, with the average time spent watching videos in the first few months climbing by 60% and click-through rates rising by 25%.

 

The advantage for brands is obvious. With the popularity of shoppable videos on the rise, Klarna’s new feature could open considerable new sales opportunities for your brand. And with AI sorting the videos for consumers, you can rest assured that your message will find its target market.

 

 

Screenshot of klarna.com displaying the look of the above described features Shopping Lens, barcode scanner and shoppable videos

 

 

New features based on customer feedback

New pilot projects are also on the agenda for Klarna. The company is introducing various features based on customer feedback in several markets, with plans to roll them out for a wider audience, should they prove to be successful.

 

For example, Klarna cashback is now available to app-users in the UK who can earn back up to 10% of their purchases at select retailers.

 

Similarly, US consumers can take out an insurance for their purchases paid for with Klarna, while shoppers in the US, UK, Sweden, Norway, and Denmark have a new sustainability filter in the app. This tool helps customers compare sustainability certificates of various products and make their purchase decisions accordingly.

 

Another option, already available globally with select retailers, is a Klarna sign-in. Customers shopping at Klarna’s participating online partners can use their Klarna app to log in to all the webshops, instead of having separate accounts at each store.

 

 

Online brand protection on Klarna

We at globaleyez follow every new e-Commerce development with heightened interest, especially with regard to their potential effect on our clients’ IP rights. Klarna’s new features, while certainly advantageous for brands and consumers, may also carry some inherent dangers in them.

 

For example, the unified login option may provide fraudsters an opportunity to get their hands on sensitive data. Similarly, shoppable videos can be used by fraudulent sellers to draw customers to their online shops.

 

Luckily, Klarna has an IP protection policy and refuses to work with businesses that infringe on somebody else’s IP rights. However, since Klarna’s shopping feed merely aggregates offers from online stores and marketplaces, infringing offers may still make their way onto the platform.

 

 

Screenshot of a random product listing on klarna.com displaying a product and its availabilities on different marketplaces

 

 

Conclusion

Klarna’s new services may help brands and consumers find new connecting points and make the entire e-Commerce experience smoother. However, these features don’t come without dangers that your brand needs to be aware of, and address.

 

If you’re worried about the protection of your IP rights on Klarna or anywhere else online, contact us and let’s create a comprehensive online brand protection strategy for your brand!