This is a sponsored feature paid for by Klarna as part of a BoF partnership.

Global payments and shopping service Klarna has expanded its growth tools for retailers beyond its origins as a payment solutions provider, now offering marketing and advertising services. Today, it serves 90 million active consumers and over 250,000 retailers across 19 countries. It counts Farfetch, Asos, Ganni, Cult Beauty and Acne Studios among its roster of clients within the fashion and beauty space.

Recent, strategic acquisitions and offerings emphasise Klarna’s bid to deepen the way it supports its merchant partners. Its recent acquisition of social shopping platform HERO enables retailers to enhance their e-commerce offerings with the benefits of physical retail, while its acquisition of influencer marketing platform Apprl allows retailers to connect directly to relevant content creators and track campaign results through Klarna. The launch of Klarna’s Comparison Shopping Service supports its partner retailers in listing their Google Product Listings Ads more efficiently, thereby maximising merchants’ return on advertising spend.

“For brands who are focused on developing great products or brand affinity, what’s critical for them is exposure and product visibility,” said Klarna CEO Sebastian Siemiatkowski, in conversation with BoF earlier this year. “We are trying to help them find new channels, new [strategies] and new customers, but letting the brand control how and where they present themselves.”

Now, BoF sits down with Klarna chief marketing officer David Sandstrom to understand how retail partners can benefit from Klarna’s marketing infrastructure and how its services have evolved.

How do retail partners benefit operationally from Klarna’s marketing division?

Currently, I think that retailers don’t have very many options to market their products. They have their product feed; they can market their products on Facebook, on Instagram, on TikTok, to some extent. I don’t believe that those are strong marketing solutions for effectively reaching a shopping audience per se. That is what we’re building.

Every retail partner that Klarna works with has what we call a Partner Success Team that take care of them across the board. The support we offer ranges from account management to managing payment structure and marketing, which effectively helps the retailer to grow through our services.

We operate like an e-commerce growth agency. We have nearly five million monthly app users in the US — 18 million globally. Then, we have teams of experts helping the merchants through our services — expertise we have developed through strategic acquisitions. For example, we bought a company called Toplooks AI — an artificial intelligence engine that scans and categorises fashion content from influencers and stylists to create powerful shoppable content.

How are you innovating customer-acquisition on behalf of your partners?

Top-line growth has become the primary focus for many retailers — so we’re utilising Klarna’s capabilities to help them with that. We now know how retailers can connect with consumers in a smarter, more scalable and data-driven way. We’ve become very good at utilising data on consumer behaviour in order to target the right people with the right content.

We’ve invested heavily into automated, digitised and AI-driven content creation to create content at scale.

We facilitate about two million transactions a day on our network, and, on top of that, we also have our app that users can use to wish list products. So, not only are we in possession of historical purchase data, but we also have a view of customer intent and rich data sets that go down to a SKU level. We understand exactly what colours the [customer] likes, or what sneaker model they’re into. This data gives us the ability to show extremely relevant content to our consumers.

For retailers today, if they have a product catalogue with 120,000 SKUs, what product do they show to what person to acquire customers? And how do they create that level of personalisation at scale? It can’t be done manually. We’ve invested heavily into automated, digitised and AI-driven content creation to create content at scale and optimise what products are shown to whom for effective customer acquisition.

Can you point to a campaign that reflects the range of Klarna’s marketing capabilities?

We just partnered with Beautycounter to launch a four-part ‘Better Beauty’ livestream series in September, which aired live from their flagship store in Venice, California. The series was hosted by celebrity makeup artist Christy Coleman, and featured make-up talent and experts to offer insights, tips, tricks, and techniques to consumers. With live shopping growing in popularity within the US, the collaboration was an exciting opportunity for us to work closely with Beautycounter to drive greater engagement among beauty shoppers through a fun, interactive digital shopping experience.

We also launched a global campaign called Heartbeats 4 Sneakers last year in collaboration with Highsnobiety, which was the world’s first digital sneaker competition to use heart-rate technology to reward consumers with a real passion for sneakers. The campaign was designed to ensure only humans could enter to win, rather than bots — addressing the real needs of the sneaker community in an authentic and effective way. We utilised new technology to measure consumers’ heart rates by having participants put their fingertip on the camera lens of a smartphone or desktop. Winners were then awarded some of the decade’s most iconic and sought-after sneaker by brands including Adidas, Nike and more.

Which new technologies are innovating Klarna’s marketing to end consumers?

We’re harnessing technology that helps us understand where consumers are so that we can elevate the omnichannel experience. The Klarna app acts as a ‘connected card’ when shoppers go into physical stores. Through this technology, the store associates will give that person a much more tailored experience because they have insight into the customer.

I think the biggest challenge for brick and mortar retail at present is its lack of personalisation. Brands do not know who enters the store, what size they’re wearing, if they’re looking for a deal or for something expensive, if they’ve been there before, or if they have a huge purchase history . The capabilities of our connected card technology has the potential to set a precedent for how retailers can interact in-store with consumers.

We’re harnessing technology that helps us understand where consumers are so that we can elevate the omnichannel experience.

I also think, for obvious reasons, technology like AR — making the world shoppable by just holding up your phone and seeing where that person’s sweater is from on the subway — will have many practical [use-cases]. Likewise, we believe in technology that caters to the creator economy. Livestreaming makes it as easy as possible to not only create content, but tag and connect products to a store.

What does the next iteration of creative marketing partnerships between Klarna and its partners look like?

At the moment, Klarna is very community-focused. We really want to understand a merchant’s community and what they’re passionate about, and then see what we as Klarna, together with a retailer, can do for that community. Rather than talking about broad campaigns that run on TV offering a 10 percent discount, I think the future is about tapping into more tightly knit communities. If that is a sneaker community, a pet- loving community or a gaming community, I believe that marketing going forward will be linked to existing passions.

In the past, marketers have tried to create interest around something that is generally not interesting. Brands instead need to consider what value they can add to a community. As an example, we teamed up with our beauty merchants to tap into the drag queen community in the US for a recent campaign and focused on what we could do for that community rather than thinking about what we could do for beauty retailers and brands. I think that’s the shift and mindset we have to have.

What’s coming next in the expansion of Klarna’s suite of retailer-tools?

We know returns have been a huge problem for the industry for a long time, so we’re looking into how we utilise our data to minimise that issue . We have also launched some big sustainability initiatives, including our Give One platform committed to giving 1 percent of all funding rounds to planet health initiatives and a carbon tracker feature in the Klarna app empowering consumers with better information on their purchases. While some retailers have solid sustainability initiatives, the majority don’t have these in place. We want to create turnkey solutions for them to track their [impact] while also giving back to the planet.

Beyond that, we are going to continue to innovate around marketing opportunities for our retailers. We’ve seen such a great start in terms of how we endeavour to use our platform and leverage our know-how and channels to connect brands with consumers, and vice versa. I believe we’re becoming a very viable marketing alternative to the Facebook and Google networks. That, to me, is the biggest challenge and the most fun right now when it comes to retail partnerships — convincing retailers and brands that Klarna is absolutely a viable alternative.