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How One Fintech Unicorn Becomes a Fashion Destination | Instant News


As the world moves fast online, the difference between B2B and B2C is becoming increasingly blurred. Today, consumers have more visibility and connections to businesses further from the value chain. And smart businesses take advantage of this direct connection to be more relevant for new audiences. One business that harnesses the power of its B2B into an expanded B2C offering is Klarna, a $ 5.5 billion fintech platform that allows buyers to buy now and pay later. In recent years, Klarna has begun offering direct-to-consumer digital shopping centers that serve nearly 8 million US consumers. H&M, Sephora, Timberland, The North Face, Fender, Anine Bing, FORWARD, and ModCloth are among the leading retailers who have signed as merchant partners, leading Klarna to 163% growth in partnerships last year. I sat down with Sebastian Siemiatkowski, CEO and co-founder, to learn more about Klarna’s evolution from B2B fintech to a consumer lifestyle brand and how becoming a B2B and B2C company can be mutually beneficial for partners and consumers.

Soon Yu: You have led the evolution of Klarna from B2B fintech to the B2C shopping platform. What is his encouragement?

Sebastian Siemiatkowski: That’s not a clear route. Payment solutions are usually designed to make life easier for technology providers and processors than for consumers. Klarna was founded in 2005 as a traditional B2B payment company focused on supporting retailers and helping them grow. We made the decision to become a bank to go deeper into the payment value chain and expand our product offering. But throughout our evolution, we continue to see consumers face too much unnecessary friction when shopping online. This is a real opportunity for us – using our B2B relationship to enhance the end-to-end shopping experience for consumers. We take the consumer’s perspective. We want to provide flexibility and value while still allowing people to buy the things they like. By making our purchases now, paying for later options that come without fees or interest, we help consumers by enabling them to see and try goods before parting with money while also taking all the risks for consumers and retailers. We can now build and directly serve a very active and loyal customer base who also shop at our partner retailers. This is mutually beneficial for our two B2B partners, who represent around 4,000 US brands and consumers, who now have a frictionless, end to end shopping experience.

Coming soon: How do you manage the transition from being a B2B company to a B2B and B2C business?

Sebastian: From an internal business perspective, we know we need to make a number of changes to meet the diverse needs of effectively performing B2B and B2C functions. After we conducted a massive review of how we operate everyday, we implemented a completely new organizational structure and way of working. Instead of traditional departments, we now consist of more than 300 small “beginner” teams with a variety of relevant backgrounds. These teams operate independently with their own budgets, investment rounds, and products. This makes us more focused, flexible and innovative, able to solve problems for consumers and retailers while ensuring that we continue to scale up without losing speed. For our B2B partners, it is very important to involve them in this trip. Our retail partners understand our mission to create high shopping services and a strong consumer network, engage new audiences, and build loyalty with existing customers. For our consumers, we focus on innovation to provide more inspiration, comfort, and value, as well as an attractive shopping experience. We launch the Klarna application, which streamlines the shopping experience from pre-post-purchase, including allowing users to shop at any online store and to create and share a wish list, get price reduction notifications, and access exclusive offers. Our consumer network in the US is now nearly 8 million. We also focus on building strong consumer brands, fueling consumers and retail demand. We can take advantage of our celebrity investors such as Snoop Dogg, and our influencer partners, such as Lady Gaga, who have huge consumer appeal and have helped drive consumer awareness and adoption of Klarna.

Immediately: How did Klarna manage to remain different and relevant to two different audiences (retailers and consumers), including throughout the COVID-19 pandemic?

Sebastian: That’s not binary. By supporting one audience in a certain way, we help both in the end. The pandemic has accelerated the pace of adoption of many of the changes that the industry has been discussing for years now. We have spent years talking with the largest global retailers who have large legacy platforms with complex structures, so we are in the right position to guide our retail partners through quick decision making and help them implement new strategies. Our application and other offers have helped resolve problems faced by physical retailers. For example, because of a pandemic, consumers expect payment without contact, digital receipts, and simplified returns. Our consumer applications and back-end technology provide options for consumers that allow them to manage their payments in a digital manner without contact, with the ability to try goods at home and return without a hitch. Klarna also empowers them not to take on unnecessary debt, giving them increased flexibility and control over their finances. Our new Vibe loyalty program allows Klarna users to get prizes for purchases not only from Klarna but also through the brand loyalty program whose products are purchased by customers. The wish list feature in our new application allows consumers to share the items they want with friends and family while providing additional opportunities for our partner retailers to reach out and engage these users.

Coming soon: What advice would you give to others who are considering the transition from B2B to B2C?

Sebastian: The benefit that B2B companies bring is that they already have the experience and resources to use to build a platform and grow their business in the consumer space. But you can’t just put something on top of an existing B2B business. You almost have to re-start the company from scratch and commit to a new B2C business mindset. You need to create new strategies that rely on specific resources, build separate teams, recruit new talents with new abilities, and find new ways to operate. I remind you that in the transition to B2C, you should expect an early pushback from B2B customers. If there isn’t a lot of friction and the change seems relatively smooth, then you might not stretch yourself and your mission far enough to ensure you will succeed in the long run. You also have to decide who you ultimately want to put in the driver’s seat, B2B or B2C. For us, consumer preferences now drive every business decision – and we have found that the right B2C decision also benefits our B2B partners in the end. After all, payments may only be transactions between buyers and sellers, but by providing a smoother and richer experience, we find we can make it a true service and relationship built on trust.

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