Klarna, a Swedish tech startup, wants to compete with big U.S. tech companies by making a picture recognition tool that uses AI to help people find the things they want to buy.
The new feature, which Klarna released on Wednesday, lets users point their phone at a piece of clothing or electronics and see results for similar things right in the Klarna app.
It’s kind of like how Google Lens leads people to ideas based on what they take a picture of.
PriceRunner, a service that compares prices that Klarna bought for almost $1 billion, is used to train the tool.
There are a lot of companies that fight with PriceRunner, such as Amazon, Google Shopping, and the French company Kelkoo.
David Sandstrom, Klarna’s chief marketing officer, told CNBC, “We see AI as a huge opportunity for Klarna. We’re going about it by giving everyone at Klarna the tools and support they need to use AI in their daily jobs.”
“Our unique way of doing business allows us to act quickly on new opportunities that offer better benefits to customers, like AI, than big traditional banks and credit card companies.”
In his opinion, Klarna’s image recognition technology is better than Google’s because it focuses more on the shopping experience rather than sending people to general search results on the web.
Push for AI
Klarna was started in 2005 in Stockholm. During the COVID-19 pandemic, more and more people started shopping online to fill out their closets.
The company’s zero-interest credit strategy appealed to younger, poorer, and credit-insufficient customers.
At the height of the tech stock excitement caused by low-interest rates, the company’s market value grew to $46 billion.
The market has been rougher for Klarna since then, and its value has dropped 85% to $6.7 billion. Also, the company fired 10% of its workers around the world last year.
This year, Klarna has been looking to AI to help it become a smaller business. Like many other fintech companies, it is working hard to make money.
Klarna announced a single month of profit in the first half of 2023 in August. First profit since 2020, when the corporation slid into the negative.
Klarna says over 2,500 of its 5,000 workers may use OpenAI API. This helps them directly integrate Microsoft-backed technologies into their products and services.
The rapid development of generative AI technology worries authorities, notably EU ones. This AI develops content from user input.
Sandstrom told Europe that they shouldn’t fall behind in the race to develop AI.
He told CNBC, “I still have my hopes up regarding Europe.” “I believe that a lot of what comes from China gives us ideas.” When it comes to growth, they have their good points.
“Of course, a lot is going on in Silicon Valley too, but there’s no good reason for Europe to be behind.”
Sandstrom also said, “I think the world should embrace AI and begin working with it to see what can go right and what can go wrong before making any judgments.” “Right now, I believe it’s way too early.”
Think about shopping
Klarna has let people pay for things over time for a long time using a method called “buy now, pay later.” The company has been working harder to add more shopping-specific features to its service, though.
Company redesigned its app in April of this year, adding new features to help users find the things they want with more advanced AI recommendation algorithms. The company was partly inspired by TikTok’s addictive finding algorithm.
A few other changes are coming to Klarna on Wednesday as well. One big one is the growth of movies that can be bought in stores in Europe. Klarna rolled it out for the first time in the U.S.
European shoppers can now watch unboxing videos, tutorials, reviews, and other videos from Klarna merchants and the company’s own network of content makers.
To make a name for itself in online shopping, Klarna wants to use the growing creator economy and social media stars who have a lot of power over what people buy.
Klarna also started its own rewards program called Klarna Cash, which gives cash back. Klarna Cash will let shoppers get up to 10% of their purchase amount back when they choose to pay now, pay in three, or pay later at the checkout of stores that have current offers. The service will start in the U.K. and will expand to other markets in the future.
Some of the stores that will be taking part are Farfetch, River Island, The North Face, and Hotels.com.