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Taking online technology instore: is it the end of the line for the checkout queue?

August 8, 2016 | Jonathan Pryer

Napoleon famously said that Britain was a ‘nation of shop keepers.’ Whether his comment has stood the test of time is open to debate but one thing is for sure: the UK certainly is a nation of online shoppers. Today some 54% of consumers buy products online weekly or monthly.

This growing consumer reliance on online shopping has taken its toll on the high street.  In the past month, two well-known UK retailers – BHS and Austin Reed – collapsed within days of each other. Between the two of them, 282 shops and over 200 years of retailing history were lost. Similarly, supermarket giant Tesco has a growing online grocery business yet it still posted pre-tax losses of £6.37bn in its 2015 annual results. This once again highlights the growing shift away from instore shopping towards online channels.

However, for retailers, having an online presence isn’t enough on its own. They must also ensure that the online shopping experience is as smooth as possible, with a reported 73 per cent shopping cart abandonment in the US this year. The payment process needs to be simple, safe and intuitive. If it isn’t, consumers will simply vote with their wallets and go elsewhere. It’s ultra-competitive out there.

Though online and mobile channels are increasingly in popularity, physical commerce remains dominant, and accounts for over 90 per cent of all retail spending in the Western world.

But brick and mortar stores are not immune from consumers’ short attention spans. Many people don’t want to queue to pay for goods and, if forced to do so, may even abandon their purchases at the checkout. With consumers now used to getting what they want at the speed of one click, the pressure is on the in-store shopping experience to be as convenient and smooth as it is online.

Klarna, a Swedish payments provider for e-commerce businesses, is tackling this issue head on. It’s rolling out its first in-store solution which is removing barriers and simplifying the checkout process in order to increase conversion rates.

The Klarna platform pays merchants immediately at the point of transaction. Consumers complete the transaction while in store, but can decide whether they settle up immediately with Klarna or pay later, over a period spanning up to 30 days. In either case, the entire transaction risk is taken by Klarna in partnership with Provenir. By weighing up over 200 data variables, consumers are assessed on their creditworthiness. If the shopper looks too risky, the deferred payment option is not offered.

Klarna introduced its service in physical shops at a Stockholm beauty store in May, and has plans to expand throughout Sweden and the rest of the world. Some merchants have estimated that transactions paid through Klarna will be, on average, 42 per cent cheaper than using card terminals.

The e-commerce landscape is ever evolving and retailers, be them online or bricks and mortar, need to ensure that they are meeting the needs of their most demanding and impatient customers. This often requires technology partnerships with the most innovative, nimble and customer-focused companies.

Klarna Case Study

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