Klarna boosts full-price inventory sell-through
Former Klarna merchant partner on why retailers sign up with Klarna
Klarna works best for merchants when it acts less like credit and more like yield management for inventory. A fashion retailer would rather sell a jacket in June at full price and pay Klarna a 3% to 6% fee than miss the sale, mark it down in September, and give up a much larger chunk of gross margin. That is why merchants measure Klarna not just on checkout conversion, but on whether it helps clear seasonal goods before markdowns start.
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The merchant workflow is concrete. Retailers compare orders that used Klarna against orders that did not, then look at bag conversion, repeat purchase, and sell through by SKU or category. In apparel, that means asking whether installment payments help move a denim jacket or dress while it is still new season merchandise.
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This is why Klarna can be sold as merchant marketing, not just lending. In 2020 about 74% to 75% of revenue came from merchant commissions, and Klarna paid merchants upfront while taking credit risk itself. The merchant is effectively buying higher conversion, faster inventory turn, and less reliance on promotions.
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The comparison with Affirm shows the difference in where value is created. Affirm is stronger on high ticket purchases, with about $365 average order value and exclusive checkout placements like Shop Pay Installments, while Klarna is optimized for more frequent, lower basket shopping and increasingly uses its app and rewards to send shoppers back to merchants.
The next step is for Klarna to justify merchant fees with even more measurable retail outcomes. As its app, ads business, and shopper data improve, the product moves further from a pay later button and closer to a demand shaping tool that helps brands sell more units at full price, earlier in the season, and with less markdown pressure.