Klarna Wants to Be Much More Than Buy-Now-Pay-Later

Most people know Klarna for BNPL, but you offer other services. How do you describe the company?

In the U.S., we are predominantly known for buy-now-pay-later, but we are so much more than that. We are a global retail bank in Europe, we’re a payment solution and we’re also a shopping platform. In the U.S. specifically, our Klarna app has over 6 million app users [a month], and we really leverage those customers to drive marketing traffic to our merchants to really build these rich experiences from the e-commerce perspective for those customers shopping within our app. Our focus is beyond payments. It’s really about: How do we evolve the shopping experience today, both from a consumer perspective as well as a merchant perspective.

When you say you want to “evolve the shopping experience today,” what does that look like, in a practical sense?

We’re really looking at: How do we bring a more digitized experience to a mall and how do we take the tech that we’ve already built from the e-commerce perspective and really bring that to supplement the current physical shopping experience.

Speaking of tech and data, 6 million people, mostly Gen Z and Millennials, use the Klarna app monthly. It allows them to pay for items at stores like Macy’s and Sephora but also do things like track packages and bookmark favorite items. How do you use your access to these consumers to drive traffic to the retailers you partner with?

From an in-store perspective, we use geolocation to know where the consumer is. If the consumer allows us to, we can let them know about a sale that’s happening or a launch that’s happening around them. We also partner with our merchants in the marketing that we do. We call it co-marketing. It’s really going to market together, having activations, whether it’s a pop-up that happens in a physical space or a marketing campaign that we do in their CRM channel or just activating our app to do push notifications. There’s just a whole slew of things that we do, and there’s an entire organization dedicated to working with our merchants to really make that marketing come to life.

Shopping centers are noticing the benefits of this sort of collaboration. You recently announced partnerships with Brookfield and Macerich. What does that entail?

We spent over a decade building payment solutions and rich experiences from an e-commerce perspective. We’re now building that same tech for in-store, as well. What that means is when a consumer walks into a mall or a consumer walks into a store, they’re able to really have a much more personalized and data-driven experience than they currently do. Unfortunately, I can’t go into detail on that, but it’s really about bringing something to physical retail that doesn’t currently exist and using the tech that we’ve developed from an e-commerce perspective to bring that to physical retail.

What can you tell us about all the different ways that you work with retail landlords?

On a media side, it’s buying advertising space. You’ve probably already seen Klarna billboards in the mall. We’re also working with malls on – it hasn’t come yet – augmented reality/virtual reality experiential [partnerships]. We have a virtual shopping livestreaming business that we recently acquired called Hero. We will be partnering with the Hero team, as well as the mall operators, to bring something to life in that space because we know that’s a really big piece of the shopping experience, especially for Gen Z. Then the last piece is really around experiential activations that we will be launching to really bridge the gap again between social and physical.

Lots of companies run experiential activations. What benefits do shopping center owners have in partnering with you on these campaigns?

Retail owners want to drive foot traffic to their mall with the end goal of driving foot traffic to the tenants that are in their malls. Then they also want to create a differentiated experience for customers so that customers keep coming back. So from their perspective, they know and we know and our merchants know that enabling Klarna increases average order value, which is great for merchant revenue. Sephora, as an example, is seeing a 65% increase in AOV, just from adding Klarna. They also are trying to get a younger demographic into their doors, and that’s exactly what Klarna has. We have 25 million customers in the U.S. who are predominantly Gen Z and Millennials. We’re able to drive our younger customers into their doors in a way that I think other partners may not be able to do quite yet. Then the last piece is really around building some of this tech together. AR/VR doesn’t really exist in malls today in a big way.

There are certain retailers that have done smaller activations around this, but this is something that they want to partner on. Livestreaming, for instance, is super relevant for a mall ecosystem. It works really well when you have so many retailers in a single space. Then there’s the experiential piece, as we mentioned. They want to get people in the door to see cool things, and that’s precisely what we’re able to partner on and offer.

What does that experiential piece look like? The pop-up you did for the NBA All-Star game celebrated the connection between fashion and basketball. It featured a gallery of iconic basketball sneakers, provided interactive games and allowed visitors to vote on what outfit the Chicago Bulls’ Zach Lavine would wear pre-game. Do all your activations have similar pieces?

It will look different for each of our partners. That was a major pop-up that we did, so that is along the lines of some of what we’re thinking. But we’re in early stages of planning right now, so I can’t say exactly what it will be yet.

With these new initiatives, are you still focusing on growing your BNPL option?

Yes. We launched Klarna Card recently, for instance, which is a big launch for us. We have a massive, massive waitlist for it, so we know there’s lots of consumers meant for the product. The card [which brings Klarna’s Pay in 4 service to Visa card form] is a game changer, as it really allows you to shop anywhere, and we have that loyal consumer that wants to use Klarna everywhere; we’re giving the consumer the card that really can live as a virtual card in your app or it can live as a physical card if that’s what you’re looking for.

Where do you hope Klarna is in five years?

Someone asked our CEO, Sebastian [Siemiatkowski], this question, and he said that he doesn’t have a definition for Klarna and what he wants Klarna to be because we are trying to do so many things. I can just sum it up as: We want to be a place where the consumer comes for everything that they want to do from a shopping perspective, and we want to really transform the way consumers operate in the payment space, as well as in the shopping space.