Klarna continues to expand the scope of its super app amid rising losses

Print

Email

After recording a strong growth during the global pandemic outbreak, many of the major buy now pay later (BNPL) firms are going through a lean phase in 2022. Leading players such as Klarna have reported a significant drop in valuation in H1 2022. In July 2022, Klarna confirmed that the firm had raised US$800 million at a valuation of US$6.7 billion, which represents a valuation drop of 85% for one the leading BNPL player globally.

Even after a difficult H1 2022, wherein the firm laid off 10% of the employees and recorded a net loss of US$581 million during the six-month period, Klarna has continued to expand the scope of its super app. For instance,

• In August 2022, Klarna announced the launch of a new feature on its app, which enables users to keep track of all their online purchases. Notably, the tracking of products is not just limited to purchases made using the Klarna app. This launch of the product tracking feature is part of the firm’s long-term strategy of becoming the only shopping app consumers ever need.
• The new feature is expected to allow consumers in the United Kingdom to better manage their online purchases. Notably, by connecting their email accounts to the Klarna app, consumers allow Klarna to scan details from the order confirmation email and import the data into the Klarna app. Product images, delivery tracking numbers, prices, carriers, and parcel tracking information are among the information users can access through the Klarna app.

Before integrating the product tracking capabilities in its app, Klarna also launched a host of other features as part of its super app strategy. For instance,

• In June 2022, Klarna announced the launch of its loyalty card feature, which allows users to store and access their physical cards in digital versions. The digital loyalty cards are integrated with the Klarna app for online and in-store shopping. Notably, the loyalty card feature is backed by Stocard, the mobile wallet provider, which Klarna acquired in 2021.
• In May 2022, Klarna also launched a virtual shopping tool, which allows consumers to shop online through assistance from in-store experts. Notably, with the new virtual shopping tool, consumers can directly connect with in-store experts by clicking on the Virtual Shopping icon on the websites of participating retailers. This feature launch builds on the acquisition of Hero, which Klarna acquired in 2021.
• The launch of a browser extension feature, with payments and coupons, which allows consumers to make purchases online directly from a desktop browser is another addition to its super app play. Along with the ability to manage payments, the desktop browser feature also applies coupon codes at the checkout page.
• In November 2021, Klarna introduced a universal shopping app, which enabled consumers to shop at all online stores, including those which were not part of Klarna's network. Moreover, the app also allowed users to explore personalized deals and shopping collections, unlock price drop notifications, save items, trace item delivery, and manage payments and returns.

One of the big drivers for Klarna to adopt a super app strategy is the potential for increased market share. With BNPL firms facing strong headwinds amid rising inflation, interest rates, and cost of living, Klarna is betting on offering more services, thereby giving its platform a way to have alternate revenue streams. Notably, offering more and more services on the platform also makes Klarna a lucrative partner for retailers and advertisers.

In tandem with its strategy to get more people using the app by integrating various services, Klarna is also building its advertising network. While the firm initially started out as a BNPL service, it is now branching out into more segments and business verticals to drive revenue growth over the next three to four years.

While the firm is expected to keep strengthening its super app strategy by launching more features, Klarna is also focusing on the growing in-store shopping market, as consumers head out to shop for products after two years of Covid-19-induced lockdown measures. For instance,

• In July 2022, Klarna announced the launch of its first retail pop-up store in Los Angeles. Klarna Oasis, the immersive shopping experience, offers in-store shoppers a range of fashion and beauty brands products. Notably, consumers still get to use the Pay in 4 payment option at checkout.
• The announcement of the new pop-up store in the United States comes days after Klarna partnered with Blackhawk Network to offer consumers the BNPL payment option at a variety of physical retail stores in the United States. This partnership is again part of Klarna’s strategy to strengthen its foothold in the in-store shopping category.

In H1 2022, net losses for Klarna quadrupled during the six-month period to reach US$581 million compared to US$141 million during the same period in 2021. While the losses were caused by rising defaults and launching new features on its platform, the super app strategy adopted by the firm can drive more revenue for the firm in 2023 and beyond, thereby potentially reducing the net losses for the firm. From the short to medium-term perspective, PayNXT360 expects Klarna to further launch and integrate more innovative features into its platform as it continues to seek more users, who will potentially use the super app for everything they want to do online.

To know more and gain a deeper understanding of the BNPL market in Sweden, click here.