Member Article

Payments pay off for Klarna as merchant adoption and consumer use deliver a top-performing year

Klarna Bank AB (publ) has released its annual financial report for 2018, revealing that Klarna’s alternative payment methods and checkout services continue to resonate strongly with consumers, merchants and partners across all 14 core markets. With an average of 1 million transactions a day on the platform, Klarna’s total global sales volumes rose by 36% YOY in 2018 to 29bn USD. The rise in volume follows an equally impressive 31% lift in revenue to 627m USD in 2018.

Welcoming 25,398 new merchants globally in 2018 - growth of almost 25% compared to 2017 - Klarna now provides payment services to over 130,000 retailers in a wide range of verticals across markets. This includes the likes of IKEA, H&M and its brands (Cos, & Other Stories, Monki, Weekday, Arket), Ticketmaster Europe and Sonos. These names add to Klarna’s existing global roster of several of the world’s best-known brands such as Adidas, Zara, Arcadia Group, SAS and Turkish Airlines.

Klarna’s consumer base has also expanded rapidly, with Klarna welcoming almost 26 million new consumers in 2018. Klarna users are highly engaged and loyal, and as their preference for Klarna’s flexible payment options continues to grow, many markets are seeing up to 70% of consumers making repeat transactions during the year.

Luke Griffiths, UK General Manager for Klarna says, “2018 has been a phenomenal year for us. Klarna has led the market in establishing an entirely new category with Pay later, that has proved hugely popular with today’s savvy consumers expecting more flexible, personalised and intuitive ways to shop. As a result, in response to demand from customers, we’ve seen a significant rise in the number of retailers adopting Klarna solutions in the last 12 months. This includes some massive global brands like IKEA and H&M joining the family, with the pipeline ahead just as strong.

“At the same time, to turbocharge future growth, Klarna made a strategic decision at the start of 2018 to significantly increase investments in people, systems and products in order to further strengthen capabilities and support future business plans. And with more and more consumers using and loving our offering, we feel very optimistic that this trajectory will continue. “

**The time is now for Pay later in the UK ** The UK has seen rapid growth as both new and existing Klarna payment options generated strong demand amongst retailers and consumers. The biggest success story is Pay later, which lets shoppers buy now and pay for goods up to 30 days later - completely interest and fee free.

In the last quarter of 2018, 25,000 new UK consumers each week decided to Pay later with Klarna. On average, a Klarna Pay later user in the UK does 8.6 transactions per year - showing strong affinity for this unique customer-centric payment option. Overall, 4.4 million Klarna users across payment options in the UK market. Increasingly, shoppers are proactively asking retailers to onboard Klarna as their preferred payment option using the hashtag #iwantklarna. This is driving strong demand amongst merchants, which has led to significant growth in Klarna’s UK merchant base. New retailers during 2018 include In The Style, Missguided, Swoon, Moss Bros, Beauty Bay and Gymshark, alongside Klarna favourites like ASOS, Topshop, Schuh and JD Sports. In all, Klarna UK currently has over 3,500 active UK retailers.

During 2018, Klarna launched a short-term instalments product that allows shoppers to fund purchases in three equal interest-free payments. The popularity of this offering has soared with merchants since its launch, with Arcadia’s brands including Topshop, Topman, Miss Selfridge, Wallis and Burton among the first to go live in November 2018. After adopting this product, retailers see on average a 55% increase in AOV and a 44% increase in conversion. Klarna’s acquisition of Close Brothers Retail Finance has significantly strengthened its position in the UK market for longer-term instalment credit, and has enabled expansion of the consumer offering into new verticals, with Klarna now working with Samsung Electronics, GAME, Mothercare and Cotswold Outdoor via the acquisition.

Klarna has been supporting up-and-coming UK entrepreneurs through its ‘Smoooth Stores’ competition. Launched to discover and develop top retail talent across the UK, the competition saw entries received from all over the UK, and over 5,000 votes cast by the public. Won by Simon Bourne of The Hand Dyed Shoe Co, the prize includes £10,000 alongside mentoring from senior Klarna executives, and free use of Klarna’s Pay later service for 12 months.

Griffiths concluded: “The UK has significantly contributed to Klarna’s global growth with new merchants and heightened consumer usage, which have increased our UK footprint dramatically. Our relentless focus on customer experience, combined with a diverse payments portfolio, have differentiated us in the market and are clearly resonating with shoppers who want financial flexibility, convenience and choice. This winning formula will support our continued success through 2019 and beyond.”

This was posted in Bdaily's Members' News section by Klarna .