As the global evolves online, the difference between B2B and B2C becomes increasingly blurred. Today, consumers have more visibility and connection with companies at the top of the price chain. And wise corporations are taking advantage of this direct dating to be more applicable to a new audience. One company that leverages its B2B assets in an expanded B2C offering is Klarna, the $5.5 billion fintech platform that allows buyers to buy now and pay later.
In the past couple of years, Klarna has begun to offer a direct-to-consumer digital shopping mall that services close to 8 million U.S. consumers. H&M, Sephora, Timberland, The North Face, Fender, Anine Bing, FORWARD, and ModCloth are among the leading retailers that have signed on as merchant partners, leading Klarna to a 163% growth in partnerships in the past year.
I sat down with Sebastian Siemiatkowski, the CEO and cofounder, to learn more about Klarna’s evolution from fintech B2B to consumer lifestyle brand and how being a B2B and B2C company can be mutually beneficial to both partners and consumers.
Soon Yu: You led Klarna’s evolution from a B2B fintech to a B2C shopping platform. What impetus?
Sebastian Siemiatkowski: It wasn’t an apparent path. Payment responses are sometimes designed to make life less difficult for the supplier and generation processor than for the consumer. Klarna was founded in 2005 as a classic B2B payment company that focuses on supporting stores and helping them grow. We have taken the decision to become a bank to deepen the price chain of invoices and expand our product offering. But our evolution has continued to see consumers revel in too many unnecessary frictions when buying food online. This has become a genuine opportunity for us: employing our B2B relationships to improve the purchase of end-to-end groceries that delight consumers.
We take the customer’s point of view. We sought to offer flexibility and price while allowing other people to buy the things they love. By creating our acquisition functions now, paying later, without commissions or interest, we were helping customers by allowing them to view and check the products before disposing of the cash, while we assumed all the dangers to the customer and the retailer. We can now create and serve directly to a highly committed and unwavering customer base that also buys from our spouses’ retailers. This is mutual for our B2B spouses, who make up approximately 4,000 U.S. brands and customers, who now enjoy an elegant grocery shopping experience from start to finish.
Yu: How have you managed the transition from being strictly a B2B company to becoming both a B2B and B2C business?
Siemiatkowski: From an internal business perspective, we knew we needed to make adjustments to meet the various desires for effective functionality of B2B and B2C functions. After conducting a thorough review of how we work day by day, we have launched an entirely new organizational design and way of working. Instead of classic departments, we are now made up of more than three hundred small groups of start-ups with a wide variety of applicable experiences. These groups operate independently with their own budgets, investment cycles and products. This makes us even more focused, flexible and innovative, to solve the problems of consumers and retailers, while ensuring that we continue to evolve without losing pace.
For our B2B partners, it is vital to accompany them on this journey. Our retail partners have understood our project of creating a high-level shopping service and a strong customer network, interacting with new audiences, and retaining existing customers. For our customers, we have focused on innovation to provide more inspiration, convenience and value, as well as attractive appeal for grocery shopping. Introducing the Klarna app, which speeds up grocery shopping from before to after purchase. , which allows users to shop at any online store, create wish lists and percentages, receive value relief notifications and access exclusive offers. Our U.S. customer network He now has about 8 million. We also aim to create a strong customer brand, stimulating customer and retail demand. We have been able to leverage our leading investors, such as Snoop Dogg, and our influential partners, such as Lady Gaga, who attract massive numbers of customers and have helped raise customer awareness and adopt Klarna.
Yu: How did Klarna manage to stay different and applicable to two other audiences (retailers and consumers), adding the COVID-19 pandemic?
Siemiatkowski: It’s not binary. By expressly supporting one or the other audience, we help in the end. The pandemic has accelerated the speed of adoption of many of the adjustments the industry has been discussing for years. We spent years talking to the world’s largest stores with massive legacy platforms with complex structures, so we were well positioned to advise our retail spouses on quick decision-making and help them implement new strategies. Our app and other be offers have helped solve the problems faced by physical stores. For example, due to the pandemic, customers expect contactless invoices, virtual receipts, and simplified returns. Our client application and back-end generation will offer customers features that allow them to manage their bills virtually contactless, with the ability to review parts at home and return them seamlessly. Klarna also allows them not to take on unnecessary debt, giving them greater flexibility and over their finances. Our new Vibe Loyalty Program allows Klarna users to earn rewards for purchases not only in Klarna, but also through the logo loyalty program in which the visitor purchases the product. Our new in-app wishlist feature allows customers to share the parts they need with their friends and family, while giving our spouses’ stores more opportunities to succeed and interact with users.
Yu: What recommendation would you give to those who switch from B2B to B2C?
Siemiatkowski: The merit of B2B corporations is that they already have the pleasure and resources to rely on to identify and expand their business in the customer space. But you can’t just put something in the most sensible thing about your existing B2B business. You almost have to start a business from scratch and have interaction in a new B2C business mindset. You want to create new methods that depend on committed resources, build separate teams, rent new skills with new capabilities, and notice new tactics to operate. I warn you that in the transition to B2C, you deserve to be waiting for an initial reaction from B2B customers. If there isn’t a lot of friction and the replenishment is relatively transparent, then you and your mission probably won’t stretch enough to make sure you’re successful in the long run. You’ll also need to take a resolution of who at the end you want to position in the driver’s seat, B2B or B2C. For us, customers’ personal tastes now determine each and every business resolution, and we have noticed that smart B2C resolutions also ultimately earn merit from our B2B partners. After all, a payment might be just a transaction between a customer and a seller, but by providing a smoother, richer experience, we found that we can turn it into a service and true, trust-based dating.