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Search less, save more, Klarna says, as the buy now, pay later (BNPL) giant launches a price comparison tool to help consumers shop smarter.
Payment firm Klarna has launched a new search and comparison tool on its app, allowing its users to compare prices across thousands of retailers.
The search and compare tool provides consumers with what Klarna hopes is a credible alternative to Google or Amazon as a starting point for their online shopping journeys and unlocks a new possible revenue stream for the firm.
The tool builds on last year’s acquisition of price comparison website PriceRunner for a reported €930m, which is Klarna’s largest acquisition to date.
“Klarna’s new search and compare tool does the hard work for consumers and compares thousands of websites in real time to ensure they have all the information they need to make informed and confident purchase decisions,” said Sebastian Siemiatkowski, chief executive of Klarna.
Siemiatkowski said that the launch is a major milestone in the company’s evolution from a payment network to a single shopping destination that covers everything from product discovery through to delivery tracking, digital receipts and returns.
Having launched last month in the US, the tool is available now for shoppers in the UK, Sweden and Denmark, and comes just ahead of both Black Friday and the holiday season.
Klarna’s 2022 Holiday Report found that 85 percent of UK holiday shoppers say they will compare prices across retailers more often this year compared with last and 84 percent of those said they would find it useful to have an app that would help them do that.
A bigger trend
Klarna may not be planning on competing with Google with regard to a search engine, but the Swedish fintech clearly has its e-commerce revenue in its sights.
This latest product launch from Klarna, building on its acquisition strategy, represents its next competitive step as it looks to improve its merchant proposition, offering new ways for merchants to understand and reach their consumers.
It represents a trend in the payments industry to go beyond traditional storefronts into contextual commerce — the idea that merchants can enable purchase opportunities in everyday activities and environments.
At the time of its PriceRunner acquisition, David Fock, Klarna’s chief product officer, commented that the deal “further cements that Klarna will not be a marketplace but a viable and competitive alternative for retail partners vs Amazon, Google and Facebook”.
Other Klarna acquisitions also show a strong intention to go beyond the storefront. Just prior to the PriceRunner acquisition, it acquired Inspirock, a travel planning app.
In July 2021, Klarna acquired Hero, a UK-based social shopping platform. Hero provides consumers with inspiration, advice and immediately shoppable content produced directly from retailers’ physical stores.
Klarna also purchased Search Engine Marketing in 2020. The Swedish start-up provides a platform that enables merchants to advertise more effectively via Google with products such as Semtail and Shoptail.
All these acquisitions and the technology and data they bring to Klarna reveal a strategy to move the payment, which is the point of transaction, up the funnel, closer to the point of product discovery, while providing a clearer closing of the advertising journey and subsequent re-targeting to users.
It also offers the opportunity to build a more merchant-centric offering that includes broader embedded financial services propositions.
This has been reflected elsewhere in the market. For example, PayPal has for many years developed a long-term acquisition strategy to add new capabilities, and expand its merchant and consumer proposition. In May, PayPal invested in Modulr, a Netherlands-headquartered embedded finance platform.
Competitive pricing
Klarna's pricing also seems to be geared towards attracting smaller brands that might struggle to gain traction in the online world.
In its 2022 whitepaper, laying out its Klarna Comparison Shopping Service (CSS), the BNPL giant noted that by switching to its CSS, retailers could save up to 20 percent on their cost per click (CPC) spend by avoiding a margin charged by Google Shopping.
This gives, according to Klarna, CSS merchants the stronger bid towards gaining the more prominent product listing advertising placement in the Google ad auction.
With the stronger bid, Klarna says that merchants can see a higher position leading to higher click-through rates, impression share and lower cost per click (CPC) as a result.
