Wednesday, 27 March 2013

Tech Bite: Swedish e-commerce company Klarna strengthens position

Rivalry between e-commerce companies Klarna and Paypal seems to prove to be exciting. It’s similar to sporting rivalries such as Barcelona and Real Madrid in the footballing world or similar to that of Redbull Racing and Ferrari in motorsports. 

Klarna is popular within Nordic countries, but have shown interest in branching out across the European Union. With headquarters in Stockholm and a research team based in Israel, the company has mentioned that this year it would be focusing its firepower on Germany while keeping an eye on the United States, the home of Paypal, owned by eBay.

The e-commerce company has a near $1 billion valuation based on its latest financing round and has shown growth in the northern countries of Europe since its inception in 2005.

How it works is Klarna affords the customer with an opportunity to order an item without paying, and get a chance to feel and touch the product, and if the customer is satisfied with the product then they can pay.

So far, no company has managed to snatch market share from online payment leaders PayPal, which was acquired in 2002 by eBay for $1,5 billion and which makes over a third of total revenue. Klarna completes an average of 70 000 transactions per day, with its 20 000 merchants and over 8 million customers.
Co-founder NiklasAdalberth mentioned that it would be fun to challenge PayPal, but taking on Paypal in its own background would be an uphill battle.

With Klarna showing magnificent growth, PayPal’s executives cannot afford the luxury of being complacent or they will find themselves eating a smaller piece of the pie.

Ashley Mokwena

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