Klarna Is Looking Toward the Future With Its AI-powered Shopping Tool
Artificial intelligence is the next frontier when it comes to enhancing the consumer shopping experience and perfecting tailoring product recommendations to individual customers — and many retailers and brands are already starting to implement it.
Klarna recently announced Klarna Spotlight, which provides an artificial intelligence-powered personalized shopping feed on its app. The functions include “Ask Klarna” where a personal shopping assistant connects consumers with product advice experts on the Klarna app, a resell functionality to sell pre-loved items on secondhand marketplaces with the aid of prefilled listing choices and more.
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Notably, a report by Market Research Future stated that the AI retail market is expected to reach more than $34 billion by the end of 2030. The Shoptalk Europe conference in Barcelona saw top companies such as Google, Lyst and Zalando betting on generative AI to make searching for products easier than ever for online consumers.
An additional report by Klarna previously shared by WWD found that 65 percent of Gen Z and Millennials stated that personalized experiences are vital to their purchase intent. Furthermore, 34 percent of those surveyed want access to a virtual personal shopper to provide recommendations based on their personal style when they are shopping online. Twenty-six percent of Gen Z and Millennials said they foresee a future where shopping experiences are completely powered by AI and robots.
“The next generation of consumers will expect a highly personalized shopping experience where products find them instead of the other way around,” said David Sandström, chief marketing officer at Klarna.
Here, Sandström discusses the future of shopping with AI and how consumer behavior has changed over time.
WWD: What are the advantages of an artificial intelligence-powered product recommendation engine?
David Sandström: According to Klarna’s Future of Retail report, 65 percent of consumers said they want the shopping experience to become more personalized in the future. AI-powered shopping feeds help consumers find the most relevant products through hyper-personalized recommendations that become increasingly tailored to their needs as they learn more about the user’s unique preferences and interests.
Through AI-powered recommendation engines, consumers will see items they actually want rather than irrelevant products they don’t need, as well as save a significant amount of time by avoiding hours of research across various websites to find the products they want.
WWD: Why did Klarna decide to partner with ChatGPT on an integrated plugin for consumers?
D.S.: We’re on a mission to provide millions of consumers with an intuitive and engaging way to discover the products they love, while also creating new opportunities for retailers to connect with wider audiences. Klarna’s shopping plugin on ChatGPT creates tremendous value for consumers and solves real problems by giving them shopping advice, inspiration, product recommendation links and price comparisons all starting with a single prompt. A collaboration like this will help define the shopping experience of the future.
WWD: Why do you think consumer preference has shifted over time toward more personalized experiences? What consumer behaviors are you seeing that show this?
D.S.: In the Western world, we see that around 80 percent of all online purchases are search-driven, while the remaining 20 percent are based on personalized recommendations. In China for comparison, the reverse is true where 80 percent of online purchases are driven by personalized recommendations and the other 20 percent by search.
Technology has become so advanced that people are spending much less time searching for goods, but rather, being matched with items they love. That’s the future we are headed in. The next generation of consumers expect a highly personalized shopping experience where the products will find them instead of the other way around.
WWD: How do you envision the future of artificial intelligence, augmented reality and virtual reality intersecting with e-commerce? How does Klarna plan to continue to grow in this space?
D.S.: Our data tells us that AI, AR and robots are likely to dominate the physical and virtual retail experience in the future. For example, only half of Gen Z and Millennial consumers in the U.S. believe they will try clothes on in the same way as today. Instead, 48 percent want to use virtual dressing rooms and 23 percent will rely on AI to advise which clothes best fit their body and fashion style. In addition, 39 percent want access to virtual “personal shoppers” who can provide recommendations based on their fashion style and taste. Klarna is in a unique advantage where we have sku-level purchase data to start offering these types of hyper-personalized shopping experiences that consumers demand.
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