The “Klarna” “machine” is launched in France. As announced by The gallery, the Swedish fractional / deferred payment giant intends to attack the rapidly expanding French market, driven by the e-commerce boom, but very competitive with multiple well-established players such as the FLOA or ONEY banks, or in rapid growth, like Alma or Pledg fintechs.
Originally, Klarna was an online payment solution, one among many. But taking advantage of the e-commerce fever, the company has gradually changed its model (and its graphic and communication universe) by offering consumers and merchants a real shopping experience, via its mobile application. The recipe is all the rage, first in Germany, then in the United Kingdom and the United States.
The figures are impressive: the customer base has increased tenfold in three years in the United Kingdom to 14 million followers, it reaches 17 million users in the United States (+ 230% in one year), thanks in particular to its partnership with the famous Macy’s, and nearly 50 million in Germany and Austria and in the Scandinavian countries (+ 10%), including of course Sweden, where Klarna handles 50% of online purchases.
The more recent Italian and Spanish markets have already attracted some 380,000 customers each. Ambitions in France are not displayed but they are “Important” while the French online commerce market is the second in Europe, after Germany, with an estimated turnover of 110 billion euros.
In total, Klarna, who enjoys banking status, generated $ 53 billion in payments last year, including $ 3 billion through her shopping app. And his latest fundraising, in the amount of $ 1 billion, valued the company at $ 31 billion.
A windfall to finance its accelerated international development. Last year, Klarna launched into Australia, Belgium, Italy and Spain, and this year France, New Zealand and Canada are on the program, before considering next year l ‘Ireland, Portugal and Poland.
Virtual shopping arcade
“We offer more complete products than the competition and above all we collect information not only on purchases but also on purchase expectations” , says Eric Petitfils, head of Klarna in France.
Originally intended for monitoring purchases and the payment method, the mobile application has gradually expanded with new features, such as the possibility of being reimbursed, managing an item return, and above all, to shop on all merchant sites, including those where Klarna is not present.
The user can thus browse in a vast shopping arcade, receive alerts, constitute whishlists and benefit from promotions. This last shopping mall functionality will be launched soon in France. For now, Klarna only offers split payment in three installments (deferred or immediate payment is expected soon) and the mobile application.
Merchants have the ability to maintain direct contact with the customer and to know the purchase history and purchase intentions. Payment is obviously guaranteed by Klarna, which also manages collection (three payment notifications with a period of 7 days before an increase for unpaid bills).
Klarna has opted for a “no charge” model for the consumer, with the merchant bearing the cost of credit and service, via a commission. Main interest for the merchant: secure their payment and increase their average basket. According to Klarna, its partner Sephora in the United States has thus increased its average basket by 65%.
Smooth customer journey
To make a difference, fintech relies on the fluidity of its customer journey, “as smooth as possible”, without friction and without ruptures. It wishes to offer consumers a gateway to the most user-friendly shopping environment possible and thus ensure greater consumer loyalty and greater frequency of use of its mobile application. And therefore to encourage them to pay for a majority of their purchases via the Klarna application.
This is the big difference with competing banking solutions, which are struggling to gain a foothold in retail. On the other hand, Klarna will have to reassure its merchant partners of its global brand ambitions in e-commerce, by creating synergies between payment activities and e-commerce activities. “We are not intended to become a marketplace”, however reassures Eric Petitfils.
It remains to be seen whether the Klarna model, which has developed mainly in countries of Anglo-Saxon culture, with deferred payment at the head of the gondola, will appeal to French merchants and consumers.
Like other global players, like Clearpay / Afterpay or Paypal, fintech should first rely on brands with which they already work abroad and which are present on the French market. However, it has just won a tender with a famous sporty blouse. But, in the absence of positive files in France (which list creditors and payment incidents), the fintech will have to take the time to acquire a learning curve in terms of scoring, which will no doubt result in a rate at the start. higher refusal than that of the competition, at least for purchases of a large amount.
A certitude : the competition will be tough. The split payment market, which is certainly growing rapidly at around 20% per year, is already very crowded. The two main players in France, FLOA and ONEY, from mass distribution, themselves have strong European ambitions. Traditional banking players, through their specialized subsidiaries, are trying to get on the bandwagon while the consumer credit market is stagnating. BNP Paribas would also be a candidate for the acquisition of FLOA.
More recently, fintechs Alma or Pledg are conquering new universes but are increasingly competing with the main players in calls for tenders, particularly in the hotly contested fashion and beauty sector. Other payment behemoths, like Visa or PayPal, are lying in wait. But, as one of the market players points out, “For now, there is room for everyone! “.