Fintech Klarna, a global specialist in banking, payment and shopping services, now intends to bet heavily on its interactive shopping business, which is now expanding internationally. Ambition? Reproduce the store experience, which consists of receiving personalized recommendations from an expert, all online and live. David Sandstrom, Klarna CMO, develops the ambitions of this new offering in an exclusive interview for CB News.
CB News: Ten months ago, Klarna acquired the Hero social shopping platform. Why ?
David Sandstrom: Hero was founded with one goal: to make e-commerce more human and less transactional by creating a more personal and convenient way to shop online that reflects the way we interact today. Unlike buying in a physical store where you can talk to an in-store expert and get product recommendations, buying online doesn’t have one essential element: human interaction.
We saw Hero’s offering as a strong complement to our existing and future services to help people save time and money on their purchase journey and decided to “acquire”. Since its launch, Hero has brought richer, more engaging real-time recommendations and product content, straight from in-store experts, to the millions of consumers who shop online every day. We see enormous potential in this space, which we can tap into using their innovative platform and services, and benefit our 400,000 business partners and 147 million consumers globally.
CB News: On May 12th you formalized the launch in 18 markets, including France, of a new offer called “Virtual Shopping”. What is that ?
David Sandstrom: Today’s consumers want the convenience they find online, but also the experience they find in-store – so far no one has really been able to offer this. With virtual shopping, we replicate the experience of receiving advice from a trusted in-store expert and apply it to the online world. Virtual Shopping puts online shoppers in direct contact with in-store experts. They simply click a button on a brand’s website and are directed to an in-store expert who can share product recommendations and inspiration, via instant messages and video calls.
We are delighted to be able to offer this solution to our worldwide business partners (over 400,000 worldwide) to provide them with a new and more efficient way to communicate with their customers online. By enabling virtual shopping on their e-commerce sites, they can now allow their teams to take their experience beyond the walls of the stores to millions of online shoppers. Experts can share photos, videos and perform live product demonstrations to help consumers through their shopping journey, increasing engagement and brand loyalty while lowering return rates.
CB News: In concrete terms, how is it organized and broken down?
David Sandstrom: For consumers, the offer allows them to connect with an in-store expert when they click on the virtual shopping icon in the online in-app store. Once connected, they can chat, receive photos and videos, receive product recommendations, and even have a video chat with an expert, recreating the experience they would have in store.
For merchants, those integrated with Klarna can easily add virtual purchases to their ecommerce site to deliver a true omnichannel experience. Once this feature is enabled, they can get a clear insight into customer interactions and purchases, which helps them improve overall performance.
Finally, in-store experts connect with online shoppers from the Klarna Store app. Once connected, they can begin engaging with consumers via live chat or video calls, making it easy to provide personalized recommendations, schedule in-store appointments, and stay connected.
CB News: where do you find your experts? How do you select them?
David Sandstrom: By experts we mean in-store employees who work for partner merchants. Klarna does not select them.
CB News: Compared to the other markets you invest in, what is France’s position in terms of virtual shopping? Soon late?
David Sandstrom: In e-commerce, there is a growing demand for virtual services and live shopping events. According to Klarna’s latest study, nearly one in five French people (18%) between the ages of 18 and 40 attended a live shopping event, and 47% have heard of it. We see this trend growing across all age groups, but it’s especially popular with Gen Zs and Millennials, who are early adopters of social shopping services.
Furthermore, more than a third of French consumers believe that offering personalized services (38%) and the ability to provide better product recommendations (38%) should be a priority for online merchants. While we know that consumers love the speed and convenience of e-commerce, they still prefer to shop in brick-and-mortar stores due to the level of customer service and interaction they have with the products. With this launch, we are enabling large-scale virtual shopping, across thousands of merchants and markets around the world, to replicate the in-store experience and bring it online to help consumers when they shop on the Internet.
CB News: How much does this market represent financially?
David Sandstrom: Virtual shopping is becoming a complementary service for many merchants and an additional axis of brand growth and engagement. Studies estimate that the global virtual dressing room market is expected to grow from $ 3.5 billion in 2021 to $ 12.97 billion in 2028. This means that the global virtual shopping market is arguably even bigger. For Klarna, this is a great opportunity to further engage merchants in their search for user-friendly products and services. We want to expand our capabilities to help retailers grow and create more engaging, authentic and meaningful experiences for consumers. Virtual shopping is an exciting part of this.
CB News: Do you think brands are fully ready for virtual shopping or are there still obstacles?
David Sandstrom: Yes. Retail has seen a major shift in recent years, which has led to entirely new levels of consumer expectations. This includes engaging online experiences that shoppers have come to expect. More and more brands are realizing the importance of adding social elements to their e-commerce sites, in order to offer consumers a richer and more interactive way to buy their products. Virtual shopping is an effective way to achieve this by enabling store teams to bring their experience to online shoppers beyond the walls of their brick-and-mortar stores.
Merchants implementing these types of services are already seeing positive traction. We know that online shoppers are up to 21 times more likely to purchase after interacting with an in-store expert when using virtual shopping than when unaccompanied. Merchants are also reporting increased customer satisfaction, decreased return rates, and even increased in-store traffic. It’s the trust that comes directly from human interaction, which is why brands are embracing these powerful tools.
CB News: What are your medium and short term goals for this new offering?
David Sandstrom: This feature is already reaching shoppers of 300 brands around the world. We now intend to implement it on a large scale, with our partners and in multiple countries, to transform online shopping into a true omnichannel experience. Looking ahead, we plan to roll out a number of new social shopping features designed to make shopping more interactive, more human and more personal. This will provide our merchants with exciting new ways to interact with shoppers, while enhancing the entire consumer shopping experience.