Fintech Klarna, the global specialist in banking, payment and shopping services, now intends to bet heavily on the interactive shopping business that is now expanding internationally. Ambition? Reproduce the store experience, which consists of receiving personalized advice from an expert, all online and live. David Sandstrom, Klarna’s chief marketing officer, elaborated on the ambitions for this new show in an exclusive interview for CB News.
CB News: Ten months ago, social shopping platform Hero was acquired by Klarna. 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 advice on products, online buying lacked one key ingredient: human interaction.
We saw Hero’s offering as a powerful complement to our current and future services to help people save time and money throughout their buying journey, and we made the decision to “acquisition”. Since its launch, Hero has delivered real-time advice and richer, more engaging product content, straight from in-store experts, to the millions of consumers who shop online every day. We see huge potential in this area, which we can tap into using their innovative platform and services, benefiting 400,000 business partners and 147 million consumers globally.
CB News: On May 12, I formalized the launch of a new offer in 18 markets, including France, called “Virtual Shopping”. What is that ?
David Sandstrom: Today’s consumers want the convenience they find online, but they also want the experience they find in-store – until now no one has really been able to deliver that. 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 the brand’s website and are taken to an in-store expert who can share product tips and inspiration via instant messaging and video calls.
We are pleased to be able to offer this solution to our merchant partners around the world (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 empower their teams to take their expertise beyond store walls to millions of online shoppers. Experts can share photos and videos and perform live product demos to help consumers through the buying journey, increasing engagement and brand loyalty while reducing rates of return.
CB News: Concretely, how are they organized and dismantled?
David Sandstrom: For consumers, the offer allows them to contact an in-store expert when they click the default shopping icon in online stores within the App Store. Once connected, they can chat, receive photos and videos, receive product recommendations and even video chat with an expert, recreating the experience they might have had in store.
For merchants, Klarna integrators can easily add virtual shopping to their e-commerce site to deliver a truly end-to-end channel experience. Once this feature is enabled, they can get a clear view of 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 interacting with consumers via live chat or video calls, making it easy to make personalized recommendations, schedule in-store appointments, and stay in touch.
CB News: Where do you find your experts? How do you choose them?
David Sandstrom: By experts, we mean in-store employees who work for partner merchants. Klarna does not choose them.
CB News: Compared to other markets you’re investing in, where is France in terms of virtual shopping? early late?
David Sandstrom: In e-commerce, there is a growing demand for virtual services and live shopping events. According to Klarna’s latest study, one in five French (18%) aged 18-40 participated in a live shopping event and 47% heard of it. We see this trend growing across all age groups, but it’s especially popular among Gen Zers and Millennials, who are early adopters of social shopping services.
Moreover, more than a third of French consumers believe that providing personalized services (38%) and being able to provide better product recommendations (38%) should be a priority for online merchants. Although we know that consumers love the speed and convenience of e-commerce, they still prefer to shop in physical stores because of the level of customer service and interaction they have with products. Through this launch, we are enabling virtual shopping at scale, across thousands of merchants and marketplaces around the world, to replicate the in-store experience and present it online to assist consumers when purchasing online.
CB News: How big is this market financially?
David Sandstrom: Virtual shopping has become a complementary service for many merchants, and an additional hub for growth and brand engagement. Studies estimate that the global virtual fitting room market is expected to grow from $3.5 billion in 2021 to $12.97 billion in 2028. This means that the overall virtual shopping market is likely to be larger. For Klarna, this is a great opportunity to further engage merchants looking for easy-to-use products and services. We want to expand our capabilities to help retailers grow and create more interactive, authentic and meaningful experiences for consumers. Virtual shopping is an exciting part of this.
CB News: Do you feel the brands are fully prepared for virtual shopping or are there still some hurdles?
David Sandstrom: yes they are. Retail has undergone a major transformation in recent years, bringing to whole new levels of consumer expectations. This includes the immersive online experiences that buyers have come to expect. More and more brands are realizing the importance of adding social elements to their e-commerce sites, in order to provide consumers with a richer and more interactive way to purchase their products. Virtual shopping is an effective way to achieve this, as it allows store teams to offer their experiences to online shoppers outside the walls of their physical stores.
Merchants who implement 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 unaccompanied ones. Merchants also report increased customer satisfaction, lower return rates, and even increased store traffic. It’s confidence that comes directly from human interaction, which is why brands embrace these powerful tools.
CB News: What are your medium and short-term goals for this new show?
David Sandstrom: This feature already reaches buyers from 300 brands around the world. We now intend to roll it out widely, with our partners and in more countries, in order to turn online shopping into a true multi-channel 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 new and exciting ways to interact with shoppers, while improving the entire consumer shopping experience.