It’s no secret that online retail has become an escape for many of us during the pandemic, whether we’re buying stylish loungewear for Zoom meetings, a new barbie for the backyard or a sheet mask for our very own indulgent #selfcare moment.
Consumers have flocked online since the pandemic hit, as new audiences are embracing e-commerce and new technologies, like buy now pay later (BNPL) solutions – and it’s no longer just millennials, but avid shoppers like those in the 45-55 age bracket. In fact, according to Ibisworld, in 2020-2021, the BNPL industry is expected to rise by 9.1 per cent to $741.5 million.
“I think Australians have been quick adopters of BNPL. They embrace new things all the time, so the sector has been growing from strength to strength over the last eight years. But now more than ever, there are new audiences now using BNPL products. It’s a result of the pandemic forcing people to try new shopping experiences because they couldn’t physically go to stores to transact,” explains Fran Ereira, Country Head at Klarna Australia & NZ.
“BNPL is a strong channel for retailers that want to provide customers with different ways to access their products and services whether it’s an aspirational or everyday need. Merchants are also recognising they need to offer customers choice.”
For the savvy consumer, BNPL is a great way to shop with flexibility, without being tied to traditional credit card terms – it’s all about interest-free and transparent solutions that offer immediacy.
“There’s been a big shift away from credit cards, particularly from younger consumers. It’s all about ‘I want it now’. They’re not interested in applying for a credit card, waiting for it to be approved, then waiting for it to arrive in the mail. They want instant gratification, transparency and flexibility, which is why they gravitate towards BNPL products,” explains Ereira.
“Another reason we’re seeing a big shift is because people understand that BNPL is actually for predominantly financially-savvy and credit-worthy individuals. There was a stigma for a long time in Australia that it was for people who can’t afford things. But customers now realise they can have money in their offset account, working hard for them, while paying for
things over time, so they’re maximising their spend.”
New kid in town
Despite the rise of BNPL in the last few years, there is little loyalty among consumers for particular products, as consumers usually prefer to use different brands for different purposes.
But what sets Klarna apart is its firm focus on creating a fun experience and emotional connection with their customers, which enables them to then connect a more engaged audience directly with retailers, rather than simply dropping them over the fence for a one-off transaction.
Just check out the brand’s hilarious lockdown parody video it created earlier this year with Universal Music, local singer/songwriter Thandi Phoenix and comedians, The Inspired Unemployed, which attracted 21 million views.
“You need to show that you’ve got love for your customers and for retailers. One of the challenges we are all facing is how to balance our messages in these unprecedented times. Retailers need to remain connected to their consumers but at the same time are no doubt challenged with recognising large proportions of their audiences may be impacted by the pandemic,” observes Ereria.
“Because people can immerse themselves in the Klarna experience [on their mobile app] and we can engage with them through shoppable blog posts, curated content, deals, wish lists and price drop notification, it helps retailers stay top of mind, but it protects retailers and customers because we’re not driving a ‘buy, buy, buy’ message – we’re driving an experience and explore message.”
A range of retailers have already partnered with Klarna, including ASOS, Kogan.com, Appliances online, JD Sports, Emu, Nobody Denim and Merry People. Globally, brands like H&M, Nike, Ikea, Samsung and Abercrombie & Fitch are on board, with exposure to Klarna’s 85 million customers around the world.
“Retailers want to see a true partner like Klarna in the market and it’s their ambition to get on board with shaking up the status quo,” said Ereira. “As we’re all consumers we’re all looking for something engaging, different and refreshing, which is what Klarna is here to do – we’ll be the ones to put the splash of pink across the country and help retailers build deeper connections directly with their customers!”
For more information on how to register to become a merchant at Klarna, visit: https://www.klarna.com/au/business/