Swedish Payment Company Klarna Takes On QVC With Push Into Livestream Shopping – Forbes
Swedish payments company Klarna is getting into livestream shopping, with its eyes on becoming a modern-day version of home shopping channel QVC.
Klarna will hold its first livestream shopping event in the U.S. next month at the Macy’s Herald Square flagship in New York City, in partnership with Cosmopolitan magazine. It is part of a two-day virtual event starting March 1 that has been dubbed “Hauliday,” which will offer shoppers exclusive deals from Macy’s, as well as Adidas, Rebecca Minkoff, Lady Gaga’s Haus Laboratories, Saks Off 5th, Express, Bluemercury and Foot Locker. Financing for all sales will be available through Klarna.
The event was modeled after Alibaba’s Single’s Day, an online shopping extravaganza that leans heavily on live selling and generated $115 billion in sales last year. “This is where shopping is going,” says Nancy Berger, the publisher of Cosmo. The livestream component will be hosted by Jackie Miranne, whose mother Joy Mangano invented the Miracle Mop in 1990 and sold millions while hawking it on what was then a QVC rival, HSN. Miranne will showcase 60 products carried by Macy’s while engaging with shoppers in real time to answer questions, provide demonstrations and respond to comments.
“At face value, it may look strange that Klarna is doing a thing like this,” says David Sandstrom, chief marketing officer at the Stockholm-based company. “But once you get into the weeds, it’s just another smart way of connecting consumers with brands.”
Klarna’s primary business is helping cash-strapped customers afford to shop, by allowing them to pay over a certain period of time without being charged interest. It has become a popular alternative to credit cards among young shoppers. (The company makes money by collecting a small fee on each transaction from retailers, plus charges late fees if customers miss a scheduled payment.) The 16-year-old business, which was valued at $10.6 billion after its latest funding round in September 2020, has amassed 90 million users around the globe, with 15 million of those in the U.S., and is backed by Silver Lake, Sequoia, Macy’s, Commonwealth Bank of Australia and others. It generated $753 million in revenue in 2019.
Klarna has begun looking to build out additional services that will draw customers and boost sales for 200,000 retail partners like Wayfair, Nike, H&M, Peloton and Sephora. It first began experimenting with livestream shopping events in November, producing hour-long segments geared towards its European audience that were more of a soft sell, with fashion and makeup tutorials and interviews with designers. Only about ten minutes of the hour was devoted to actual sales pitches. More than 100,000 viewers tuned in, driving sales of more than 5,000 items during each of the six episodes.
“The ambition on my end is to create an ultra-modern QVC,” says Sandstrom, referencing the cable channel created in 1986 that went on to become a multi-billion dollar business selling low-budget jewelry, clothing, housewares and other products with high-energy salespeople and live interviews with the product makers. “Without all the cheesy sales tactics and salespeople.”
For the March event, Klarna and Cosmo will direct viewers to livestream platform ShopShops. Sandstrom plans to build or acquire his own livestream platform this year, which would then be made available for free in the app. In addition to hosting its own livestream shopping events, Klarna may open up the platform to influencers and other individuals who want to do live demos or tutorials on products they’ve received from brands. The company spent heavily in its initial pilot, says Sandstrom, and is looking for ways to scale production in a cost-efficient manner. He says his ultimate goal is to make entertaining content for consumers interested in fashion and design that “could run on TV, YouTube or almost Netflix,” not unlike the myriad of cooking shows available to stream.
Klarna is among a growing number of companies looking to become a destination for livestream shopping, with competition from venture-backed startups like ShopShops, tech giants like Facebook, Instagram, TikTok and Amazon and incumbents like QVC and HSN, which merged in 2018, and are now available on streaming services as well as cable television. Amazon dedicated a portion of its site to live selling in 2019. Walmart began testing live selling on TikTok in December. Macy’s is testing live shopping for the first time in March, according to a spokesperson.
They are all eyeing the success that livestream shopping has had in China, where it has exploded, generating retail sales of $66 billion in 2019, according to market research firm iResearch. In the first half of 2020, more than 10 million livestream shopping events were held online, according to the Chinese government, pushing everything from lipstick to appliances. It has been slow to catch on in the U.S., but Coresight Research sees livestream shopping growing to $25 billion in sales in the country by 2023. “It’s not going to happen overnight,” Sandstrom says.
The concept is getting a boost from the pandemic, with brands that include Levi’s, Tommy Hilfiger and Rebecca Minkoff trying out live shopping as a way of reaching people staying at home and on their phones rather than out shopping. Sandstrom sees it living well beyond the lockdowns because even though people like the ease of online shopping, they still crave the feedback, approval and joy of shopping with others.
“These days it’s all about creating intimacy. I think this is one of the number one ways to do that,” says designer Rebecca Minkoff, whose namesake fashion and accessories brand has seen a 30% spike in website traffic after the eight or nine live selling events she has done on Instagram, Amazon and ShopShops. She plans to do significantly more live selling as part of a new partnership in the fourth quarter, but declined to disclose additional details.
Sandstrom is ultimately bullish on the idea. “I think traditional e-commerce is going to plateau without adding this dimension,” he says. “It’s the new version of going to the mall together.”
Published at Thu, 18 Feb 2021 14:00:00 +0000