Is this the end of Buy Now Pay Later? Klarna on the Ropes
Is this the end of Buy Now Pay Later? Klarna on the Ropes
Coming out of the pandemic there was one question on many minds above all: What trends will stay and which ones will go?
A recent article from Banking Day highlights a few items about the Australian arm of Klarna:
* Losses in 2021 4x greater than they were in 2020, up to $56 M from $14 M.
* The company is being propped up by the Stockholm-based parent company, but unclear for how long.
* Amount of commission income from merchants and consumers fell to a third of its previous value in 2021 over 2020. This would make it pretty clear why profitability has cratered there?
All the while marketing in Australia doubled year over year.
Of course, you are investing in marketing for growth... but the financials are telling you that more growth just drives you faster off the cliff? Now what?
Sounds like a definition of a business model which may not survive going forward.
Is there even enough here for a credit card company to acquire instead of replicating it themselves?
Better question: is there anything here to replicate?
The only remaining question is:
What does this mean for the rest of the players? Is BNPL like the aggregator market -- dozens tried, but only one or two succeed?
Is it some odd coincidence I can't get the Affirm investor website to load right now?
