Fintech firm Klarna overhauls its app with a TikTok-like discovery feed as A.I. hype swirls

Klarna has announced a significant redesign of its app, adding a TikTok-inspired AI-powered news feed, customized stores for social media content creators, and the flexibility to sell second-hand goods.

The Swedish pioneer of buy now, pay later said on Tuesday that its recent project will help users find the products they’re searching for using more advanced AI advice algorithms, while retailers will have the ability to succeed in customers more effectively.

Artificial intelligence will construct a private profile of shoppers based on their shopping behavior and the brands they like. Then you will see recommendations from the Klarna network of 500,000 retailers, which incorporates Nike, H&M and InstaCart. Klarna has over 150 million users worldwide – including users accessing online payment tools through retailers.

According to David Sandstrom, Klarna’s chief marketing officer, the corporate took inspiration from Chinese technology platforms, which he said had mastered the art of algorithm-based shopping.

“Just a few years ago in China, 90% of transactions began with a search,” said Sandstrom. “Today, lower than 50% of purchases start with a search because recommendations are so tailored to them.”

“Our ambition is largely to supply people products and types before they know they need them,” he added.

TikTok specifically has turn out to be the envy of major online platforms because of its advanced targeting. The company is rapidly expanding its e-commerce business, which reportedly reached $1 billion in sales in the primary quarter. information.

Still, Sandstrom admits that Klarna’s technology is not as sophisticated as TikTok’s — but he’s confident the corporate may someday reach that level.

“It can be naive to match us to the TikTok advice engine. It can be a blatant mislead say we’re close,” he said. But we have now conditions for that.

Klarna joins many other tech corporations which might be loading their services with AI software to raised tailor content to users, as ChatGPT OpenAI’s rise in popularity has generated buzz across the technology.

Spotify music streaming platform recently introduced DJ powered by artificial intelligence which selects tracks, for instance, based on an individual’s listening habits.

Klarna itself previously launched the flexibility to integrate ChatGPT into its service with a plugin that enables users to ask the favored AI chatbot for shopping inspiration.

But Klarna doesn’t rely solely on AI to personalize its services for users. The app also launched an “Ask Klarna” feature on Tuesday, which allows shoppers to talk or video call with customer advice specialists.

Among other features being introduced by Klarna is a resale option that enables people to sell used clothing, electronics and other items through an affiliate platform. Klarna declined to reveal a partner for the resale service.

In its home market of Sweden, Klarna already offers the chance to sell used goods through a partnership with Tradera’s resale marketplace.

Resale platforms comparable to Depop and Vinted have grown in popularity in recent times, partly resulting from Generation Z’s adoption of a circular economy that promotes sustainability by reducing waste through reuse and recycling.

Klarna can also be launching a tool that enables content creators to create their very own storefronts to advertise products from brands they’ve partnered with. A service called “Creator Store” will soon be launched within the United States.

It also launches a self-service tool for advertisers called “Ads Manager”, which allows marketers to trace lists of paid products they’ve purchased from the Klarna app. Recently, Klarna has been attempting to diversify its promoting business to scale back its reliance on merchant fees. Marketing accounts for 10% of Klarna’s total revenue, having grown by 131% in 2022 in comparison with last yr.

Klarna is one among many buy-now-pay-later corporations that allow people to separate the price of their purchases over monthly, interest-free installments. The company makes its income by charging a small fee on each transaction from the retailers offering its payment method.

The company hopes to show its fortunes around after a brutal yr that saw it slash its valuation 85% to $6.7 billion, lay off greater than 10% of its workforce and post a $1 billion loss.

Sandstrom said it expected Klarna to interrupt even on a monthly basis by the summer, echoing messages from CEO Sebastian Siemiatkowski late last yr.

“The growth we’re seeing now could be sustainable,” he said. “Going into the longer term, I believe AI will play a giant role within the productivity growth we’re seeing.”

He added that Klarna employs engineers to guide the work on artificial intelligence – but “the profile of individuals we’re searching for has modified quite dramatically in the previous few months.”

“What a single extremely talented engineer can achieve in comparison with what we would have liked an entire team to do is big,” said Sandstrom.

Klarna and other buy now, pay later products have proven popular through the onset of the Covid-19 pandemic. Online shopping became more common as opportunities to spend money in person were limited.

But because the war in Ukraine fueled global inflation and sparked fears of a recession, central banks all over the world raised rates of interest, shaking investor sentiment around zero-interest, buy-now, pay-later platforms.

Meanwhile, the buy-now-pay-later principle has come under scrutiny from regulators over concerns that it pushes some consumers, especially younger consumers, into late payments. In the UK, the federal government has proposed recent rules to make the means of applying for a buy now, pay later loan harder.

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