The Swedish “buy now, pay later” pioneer said Tuesday that its new design would help users find the items they want by using more advanced AI recommendation algorithms, while merchants will be able to target customers more effectively.
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Swedish technology startup Klarna is revolutionizing the online shopping experience with its AI-powered image recognition tool. This new feature, launched by Klarna on Wednesday, allows users to simply point their phone at a clothing item or electronic product and find similar products directly within the Klarna app. It’s a similar concept to Google Lens, which suggests relevant items based on images captured by a user’s camera.
The image recognition tool developed by Klarna is trained on data from PriceRunner, a price comparison service that Klarna acquired for nearly $1 billion. PriceRunner competes against giants such as Amazon, Google Shopping, and Kelkoo.
David Sandstrom, Klarna’s chief marketing officer, emphasized the company’s focus on AI, stating: “We see AI as a tremendous opportunity for Klarna, and we empower our employees to utilize AI in their daily work. Our unique operating model allows us to embrace emerging technologies, like AI, faster than traditional banks and credit card companies.”
Klarna users can now effortlessly discover recommendations for similar products within the app by pointing their phone at a clothing item or gadget.
Klarna
Klarna’s image recognition technology offers a shopping-focused experience, distinguishing it from Google’s more general search results. The company’s aim is to enhance the shopping journey for its users.
AI push
Klarna, founded in Stockholm in 2005, experienced exponential growth during the Covid-19 pandemic due to the surge in online shopping. Its zero-interest credit model resonated particularly well with younger consumers who lacked credit history necessary for traditional credit card applications.
At its peak, Klarna’s market value reached $46 billion fueled by low interest rates and the tech stock frenzy. However, the company has faced challenges since then, with its valuation decreasing by 85% to $6.7 billion and implementing workforce reductions.
In its pursuit of profitability, Klarna has turned to AI. The company reported a month of profit in the first half of 2023, marking its return to profitability after a loss in 2020. Over half of Klarna’s employees now have access to the OpenAI API, allowing them to integrate Microsoft-backed AI technology into their tools and services.
Despite concerns about the rapid advancement of generative AI technology, Klarna encourages Europe to embrace AI rather than lag behind. David Sandstrom, Klarna’s chief marketing officer, hopes that Europe draws inspiration from China’s progress in this field. He believes that the potential of AI should be explored before passing judgment, adding that it’s still premature to make conclusive evaluations.
Focus on shopping
While Klarna has long offered its “buy now, pay later” installment payment option, the company is expanding its offerings to include more shopping-specific features. In April of this year, Klarna revamped its app with new features inspired by TikTok’s addictive discovery algorithm, aiming to personalize users’ feeds and enhance their shopping experiences.
Klarna is also introducing other updates such as the expansion of shoppable videos in Europe, enabling users to view unboxing videos, tutorials, reviews, and more. Additionally, the company has launched its own cashback rewards program called Klarna Cash, starting in the U.K. and expanding to other markets in the future.
By leveraging the power of social media influencers, Klarna seeks to tap into the growing creator economy and establish its presence in the e-commerce industry.
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