Swedish Buy Now, Pay Later (BNPL) service Klarna announced via a prerecorded video message that it is laying off 10% of its global workforce. code And Tech Crunch. The company is currently about 7,000 employeesAnd by the 10% cut, the number of affected workers would be around 700.
BNPL services such as Klarna, Affirm, and Afterpay allow users to purchase products at a fraction of the total price or at only a fraction of the total price. Customers can then make incremental payments over a period of time, but are usually charged an interest-free fee for deferred payments. BNPL business soared to the peak of the epidemic When so many people are tied to cash and there’s nothing better than shopping online.
Sebastian Siemiatkowski, CEO of Klarna, communicated the news to employees in a pre-recorded video message. He cited “the outbreak of war in Ukraine, changes in consumer sentiment, sharp rises in inflation, a volatile stock market and the possibility of a recession”. layoffs. Siemiatkowski explained that workers in Europe would receive “related compensation,” but added that the retirement process for US employees would “look different” by location.
last week, wall street journal Klarna reports that the company is seeking new funding of $30 billion, about a third less than the $46 billion it was valued at nearly a year ago. Competitor Affirm, a BNPL service, saw a similar decline this year, with shares falling 75%.
However Increased BNPL usage By the end of last year, the lack of customer trust in this unstable economy is likely part of the reason why BNPL services are struggling. lately Make a report soup gate About 73% of customers Generation Z (those born between 1997 and 2012), and about 43% of them report that they failed to pay at least once. Meanwhile, the report of Fox Business This indicates that around 30% of all BNPL clients are struggling to pay off their debts. Current State of Inflation It doesn’t help. BNPL services cannot make money unless you pay them back, which can be a risky reason to run a business.
Despite the decline in value and layoffs, Siemiatkowski told employees that “Klarna continues to hold a strong position in the market” and he is still “constantly optimistic about the future of Klarnas.” other tech companies, including Meta; apologizeSnapchat is delaying hiring, and Netflix has already laid off more than 150 employees.