Klarna launches price comparison service and aims to become a de facto growth partner for retailers
It seems like we can’t go more than a few days without Europe’s most valuable private fintech, Klarna get ink. Whether it’s a massive check, from a famous CEO for the day, a new feature, job creation, technical problems that connect users to other user accounts, or students be contacted by collection agencies, Klarna is everywhere.
BNPL in a nutshell
In a world struggling with time off and financial uncertainties, Klarna’s Buy Now Pay Later model is an attractive offer. Simple concept: Instead of shell out cash or cashier, Klarna pays the retailer on your behalf and allows you to pay them back within weeks or months. BNPL does not mean that you get any discount with your purchase, it is simply a matter of cash management.
Plus, unlike a traditional credit card which is likely to charge interest or fees, if handled properly, BNPL is a free way to get credit. So if the BNPL providers don’t charge you a fee, in Rod Tidwell’s words, “Show me the money”. The money is in a cup that Klarna takes of every product they help a retailer sell. The argument here is that by partnering with Klarna, retailers might have to fork out a slice, but they’ll move more merchandise and results, bringing home more cheddar.
And Klarna has been busy with this pitch. Swedish fintech has more than 250,000 global business partners, including H&M, Sephora, Macy’s, IKEA, Samsung, ASOS, Ralph Lauren, Abercrombie & Fitch and Nike, and has 90 million active users worldwide with 2 million transactions per day.
A small sidebar
So it would seem that with the BNPL industry pretty much sewn up, where does a giant then set its sights? In short, to become the de facto growth partner of traders. First stop? A price comparison service.
From today, Klarna price comparison service is present in 21 markets across Europe and offers retail partners an attractive offering, increased customer reach, all with a ready-to-buy intention.
In order to give context, let’s take a short sidebar in the world of advertising / ecommerce, namely that of CPC, or cost per click. One tool in a marketer’s bag is CPC advertising, and as the name suggests, said advertiser (marketer) pays a publisher, in most cases a search engine (yes, you Google), each. once a visitor clicks on their ad. In its most simplistic formula:
CPC (€) = Advertising cost (€) / Clicked ads (#)
An example: if I spent € 100 on a campaign and received 32 clicks on my ad, my CPC would be € 3.125.
The CSS Klarna advantage
Google’s CSS (Comparison Shopping Service) was implemented in order to diversify the search results of ads for product offerings (let’s not forget this solved yet € 2.42 billion fine the search giant was slapped in 2017). A certified CSS partner acts as an intermediary, facilitating the publication of a product listing ad.
There are two basic ways that CSS providers can make money, through a monthly hosting fee and / or through a CPC model by charging for clicks. Klarna’s bid ignores a merchant’s 20% reduction in CPC spend (see above), giving them full bidding power to secure the top position and / or PLA placement.
Example: If a merchant would bid $ 1 for the first location, it would only be worth $ 0.80 with Google, but with Klarna, they would get the full power of the $ 1 auction. The flat rate for CSS is just the small monthly hosting fee that Klarna charges, but the merchant still manages and pays for their offers.
Now add to the mix that Klarna will also list a retailer’s product listing inventory on their price comparison pages; visibility and customer reach are further enhanced, ultimately leading to conversions.
“We are extremely pleased to launch the Klarna price comparison service today. With this new product, we are making it easier for retailers to more effectively list their ads for Google product offerings. In practical terms, this means that we are providing retailers with a more efficient and cheaper way to grow their customer base and convert highly relevant traffic from consumers looking for the products they want to buy, thus maximizing the return on merchant ad spend. », Explains the marketing director of Klarna. David Sandström. “As a growth partner for our retailers, we are excited to launch even more products and services to support their strategy in the near future. “
Klarna’s price comparison service is now available in Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Spain , Sweden, Switzerland and the United Kingdom.
Klarna was supported by Redwood capital since 2010 and more recently, Silver Lake, Dragon tree, Bestseller group, Permira, Group of ants, Capital HMI, TCV, North Zone, Commonwealth of Australia Bank, Merian Chrysalis Investment Company Limited, funds and accounts managed by Black rock among others.