Klarna acquires social shopping startup HERO to expand merchant solutions

The news: Sweden-based buy now, pay later (BNPL) firm Klarna acquired HERO, a retail tech startup that connects online shoppers with in-store retail associates via text messages, videos, and online chat rooms. HERO lets in-store employees answer questions, offer advice, and review products to help online shoppers make purchase decisions. The acquisition is valued at about $160 million, people familiar with the deal told The Wall Street Journal, and Klarna will make the tech available for all of its retail partners.

Why this matters: HERO could help retailers strengthen online customer relationships—making Klarna a more attractive BNPL partner for merchants.

• Providing a good customer experience is more important than ever, but many customers say firms aren’t meeting their expectations: 59% of consumers in North America feel that the companies they do business with need to improve their customer experiences, per Broadridge. Solutions like HERO help by giving online customers valuable brand and product insights and the same level of support they’d get in-store—closing the gap between brick-and-mortar and ecommerce. Having this type of support can be the difference between a completed or lost sale: Nearly 40% of US shoppers say that knowledgeable support representatives for a brand are the most important element for a good customer experience, according to Bizrate Insights.
• Giving merchants this support helps fortify Klarna’s partnerships. Merchants using HERO can avoid spending extra on customer experience personnel; they can use their in-store staff to support online customers—letting them maximize existing resources and helping improve their bottom lines with increased online sales. This is good news for Klarna’s 250,000 merchant partners—and it may make them less inclined to partner with other BNPL providers that don’t offer the same customer experience benefits. Maintaining these relationships is critical for Klarna because the company generates much of its revenues from the fees it charges retailers.

The bigger picture: Klarna has made a number of acquisitions in the last year to enhance customers’ experiences and its overall platform—like snagging AI-based retail tech firm Toplooks in March and acquiring post-purchase customer experience company Woilà last year. Bringing in HERO furthers that push and makes Klarna a stronger competitor in the BNPL space. It could also open up more revenue-generating opportunities if it charged merchants for these types of services down the line.