Klarna overhauls its app with a TikTok-like discovery feed amid AI buzz

Klarna has announced a radical redesign of its app, adding an artificial intelligence-powered TikTok-inspired discovery feed, a customized shop for social media content creators, and the ability to sell second-hand goods.

The Swedish “buy now, pay later” pioneer said on Tuesday that its new design uses more advanced AI recommendation algorithms to help users find the items they want and help merchants find more He said it would enable him to target customers effectively.

AI creates a personal profile of shoppers based on their shopping behavior and favorite brands. Then you’ll see recommendations from his 500,000 retailer network on Klarna, including Nike, H&M, and Instacart. Klarna counts his over 150 million users worldwide. This includes users who access his online checkout tools through retailers.

According to David Sandstrom, Klarna’s chief marketing officer, the company was inspired by Chinese technology platforms and mastered the art of algorithm-driven shopping.

“A few years ago in China, 90% of transactions started with a search,” says Sandstrom. “These days, less than 50% of his purchases start with search because recommendations are tailored to search.”

“Our ambition is basically to give people products and brands before they want them,” he added.

TikTok in particular has become the envy of major online platforms thanks to its advanced targeting. According to The Information, the company is rapidly growing his e-commerce business, with reported sales of $1 billion for him in the first quarter.

Still, Sandstrom admits that Klarna’s tech isn’t as sophisticated as TikTok’s, but he’s confident it can reach that level one day.

“It would be naive to compare us to TikTok’s recommendation engine. To say we’re close to it is a blatant lie,” he said. there is.”

As OpenAI’s ChatGPT grows in popularity and the hype around the technology grows, Klarna has announced that many other technologies that have AI software in their services to better tailor content to users. joined the company.

For example, music streaming platform Spotify recently announced an AI-powered DJ. This, for example, selects songs based on a person’s listening habits.

Klarna itself previously launched the ability to integrate ChatGPT into its service via a plugin that allows users to ask its popular AI chatbot for shopping inspiration.

But Klarna isn’t relying solely on AI to personalize its service to its users. The app also launched an “Ask Klarna” feature on Tuesday, allowing shoppers to chat and video call with a human customer advice expert.

One of the other features Klarna is rolling out is a resale option that allows them to sell used clothing, electronics and other items through their partner platforms. Klarna has refused to disclose its reseller service partners.

In its home market of Sweden, Klarna already offers the ability to sell second-hand goods through a partnership with the resale market Tradera.

Resale platforms such as Depop and Vinted have become increasingly popular in recent years as Gen Z embraces the circular economy, which promotes sustainability by reducing waste through reuse and recycling.

Klarna is also launching a tool that allows content creators to set up their own storefronts to promote items from brands they have affiliated with. The service, called “Creator Shop,” will soon launch in the US.

It will also launch a self-service tool for advertisers called “Ads Manager,” allowing marketers to track paid product listings acquired through Klarna’s app. Recently, Klarna has diversified into advertising to reduce its reliance on commissions from merchants. Marketing accounts for his 10% of Klarna’s total revenue, and in 2022 he’s up 131% from a year ago.

Klarna is one of the buy now, pay later companies that allow people to split the cost of their purchase interest-free in monthly installments. The company makes money by charging retailers that offer payment methods a small fee per transaction.

The company wants to turn its fortunes around after a brutal year that cut its valuation by 85% to $6.7 billion, laid off more than 10% of its workforce, and reported a loss of $1 billion.

Sandstrom said he expects Klarna to be profitable on a monthly basis by the summer, echoing a message from CEO Sebastian Siemiatkowski late last year.

“The growth we are seeing now is sustainable,” he said. “I think AI will play a big role in the efficiency gains we are seeing going forward.”

He added that Klarna is hiring engineers to drive its AI efforts, but added that “the profile of the talent we are looking for has changed quite dramatically in the last few months.” rice field.

“It used to take an entire team, but what one very talented engineer can accomplish is staggering,” says Sandstrom.

Klarna and other buy now, pay later products became popular during the Covid-19 pandemic. Online shopping became more popular as in-person spending opportunities were limited.

But as the war in Ukraine sparked global inflation and sparked fears of a recession, central banks around the world were raising interest rates and investing in ‘buy now, pay later’ platforms that offer interest-free credit. It rocked the family spirit.

Meanwhile, regulators are scrutinizing ways to buy now and pay later over concerns that they are pushing some consumers, especially younger ones, into arrears. In the UK, the government has proposed new rules aimed at adding some friction to the application process for buy-now-pay-later loans.

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