Challenges with e-commerce, today and tomorrow

#Eric Yang, Klarna

Strategy Method Technology

Business case

Expectation Reality

$ sent, got nothing backCredit card info stolen

Online shopper

Business case Online shopper

Got something undesirable backCredit card info stolen

Expectation Reality

Business case Online shopper

Expectation Reality

“Looks sweet, wrong color/size tho”

Credit card info stolen“Changed my mind”

Business case Merchant

Customers don’t pay / pay too late Lack of core competencies High cost on talent acquisition / labor / debt collection etc.

Poor conversion …“Can’t find my credit card” …“Credit card out of reach”

Business case

Online shopper

Merchant

Fraud risk

Credit risk

Operational risk/concern

UX

Strategy

How are these risks handled at Klarna

Strategy

Risk measurement vs. Risk management

Strategy

Credit risk Fraud risk Operational risk Top line vs. bottom line UX

Time

Effectiveness

Relative plateau

Relative plateau

Relative plateau

* Methods introduced to measure and manage non-linearities

* Scoring model introduced

* Basic risk measurement * Rule-based risk management

Product

* What’s the best offering for every single consumer/merchant

* What’s the best for Klarna

Approve or not?

Fixed set of options for customers to select

Static disbursement config per merchant

Static pricing, acceptance commitment etc. per merchant

Prime ConcernBottom line

Approve or not?

Present what’s “best” for both the customer and Klarna first

Dynamicdisbursement config per merchant

Dynamicacceptance commitment etc. per merchant

What to offer?What to offer per transaction?

Bottom line

Top line

Personal UX

Strategy Optimization

Bottom line

risk/losscost reduction

operational efficiency…

Top line

revenue

UX

pre-purchasepurchase

post-purchase…

Personalization

Method

Incremental

Feedback loopSCRUM

Reiterative

Technology

Optimizing relativity Personalizing UX

SCRUM Reiterative dev

Granular decisioningAutomation

Infrastructure

Enable Scale

Technology

Data warehouse

Relational database

Architecture optimized for data-driven decisioning

Strategy - relativity, personalization Method - small gains, reiterative Technology - data, data infra