As competition grows, Klarna wants to reach customers earlier in their shopping journey
- Klarna has launched a new browser extension, which offers virtual cards, saved collections, and automatic couponing.
- As competition in the space grows, payments firms' customer acquisition strategy is shifting to meet users earlier in their shopping journey.
In today’s mobile-centric digital world, it appears almost counterintuitive to go back and launch products for the desktop, especially for non-work related uses, like online shopping. Klarna has done just that with its new browser extension product.
Klarna’s new browser extension is designed to extend the company’s offerings across retailers and platforms for customers. The extension allows users to avail Klarna’s payment solutions while shopping online using a browser, the same way they would on the Klarna mobile app. Customers can shop using Klarna’s BNPL, for example, using any device of their choice, and even with retailers who may not be affiliated with the fintech.
“With the introduction of the browser extension, consumers shopping on desktop get to experience the flexibility, transparency, and convenience of shopping with Klarna at every online store. Especially in markets in which desktop is currently still the most popular medium to shop, the browser extension is the perfect door-opener into Klarna’s ecosystem,” Daniel Lange, the VP of product at Klarna, told Tearsheet.
What motivated the payments provider to introduce a browser extension? Data shows that desktop shopping still drives 32% of all e-commerce traffic and that 44% of online orders are still placed on the desktop. So maybe they’re on to something.
Lange revealed that in addition to desktop’s continued relevance to online shopping, the high cost of revolving credit also set the stage for such an offering.
“We see that users are turning away from the high cost of revolving credit, as demonstrated by the growth of debit card volume, which has been 3 times that of credit card volume in the last decade according to the Capital Economics Report,” he said. “The launch of our new browser extension is a direct response to meet these changing needs.”
Klarna’s browser extension has its own unique set of features. The extension offers customers a one-time virtual Visa card, which users can issue directly from their internet session and use to shop with any online retailer. In addition, the extension allows users to save products that they find while shopping online to a personal folder within the Klarna ecosystem and activate price drop notifications for them. Whenever customers make a purchase or save an item with the browser extension, it is directly reflected in their Klarna app. Within the app, customers can access post-purchase features like delivery tracking, returns management, and CO2 tracking.
Such synchronization allows customers the ability to seamlessly switch between devices throughout their shopping journey.
To promote the adoption of its new product, Klarna announced an accompanying rewards program. For the American and German markets, these rewards will be in the form of cashback, while in the British and French markets, consumers will be rewarded with gift cards.
Perhaps the most eye-catching of the new extension’s features is the automatic couponing option. At the time of making a purchase, the extension automatically adds any coupons or discount codes active for the product to the shopping cart. It is designed to help customers get the best deals for their purchases and maximize their savings. This feature was made possible by Klarna’s acquisition of Piggy earlier this year. Piggy gained traction helping people save money by collecting online shopping coupons and automatically deploying them to users’ carts.
As Klarna swells up its offerings, it begs the question, what is the firm’s renewed vision?
“We want to become the world’s favorite way to shop, pay, and bank. To achieve this, we need to be available to consumers wherever and whenever they shop,” Lange told us.
Klarna’s acquisition of Piggy is not a standalone event. There is a growing trend among payments companies to acquire shopping rewards and automatic couponing platforms, as also seen with PayPal’s $4 billion acquisition of Honey last year. There appears to be a drive among payment processors to meet customers earlier in their shopping journey, and compete for their business there.
The logic is simple: if users are already using your services before they reach the checkout page, where could you possibly lose them in the payments cycle?
Lange noted that the payments space is in the midst of significant change, with new players entering and the industry consolidating. For Klarna, this competition means a transformation in what the firm does for its customers. “We have always understood that Klarna will coexist with other products at checkout, which is why our focus is on what will drive consumers and merchants to select Klarna,” Lange said.
“Our differentiation is in the all-in-one shopping experience we provide for our consumers, with payments making up just one piece of that, as well as the tools that we are building out to be a growth partner for retailers.”
That tells us a lot about the future of the payments space, where payment options at checkout are now table stakes. The Klarna executive believes that the services that will stand the test of time and emerge victorious will be those that offer more than just BNPL and succeed in delivering real value to consumers across multiple channels.
“At Klarna, we are broadening our suite of services for merchants and providing shoppers with even more tools to help get inspiration and shop responsibly from the brands they love, including price drop notifications, curated content, and collections, alongside payment methods, transparent banking, budgeting features, delivery tracking, and more,” he detailed.
Earlier this year, Klarna acquired Swedish price comparison platform PriceRunner, for over $120 million. That acquisition also falls in line with Klarna’s updated customer acquisition strategy: to reach customers before they have decided to make a purchase.
In 2022, Klarna will look to enhance the shopping experience for consumers in order to make it even more engaging and rewarding. Early in the year, the firm plans to launch the Klarna Card in the US, bringing its pay-in-4, interest-free payment offering to a card-based system, which users will be able to swipe in-store and online.