Indochino is looking to expand its horizons as more shoppers are ready to buy formalwear again, introducing its made-to-measure apparel in Nordstrom stores for the first time in June and also bringing “buy now, pay later” (BNPL) into its payments ecosystem.
In implementing Klarna’s Pay in 4 solution, Indochino sought to reach more Gen Z and millennial customers, particularly those who are often buying their first high-priced suit, yet on the hunt for more flexible, transparent spending options. The men’s wear brand also wanted to lift its average order value (AOV), and in the long term, attract and convert new customers, increase brand loyalty and lifetime value, and set its business up for future growth.
Through the integration, Indochino lifted AOV 16 percent and increased conversion from paid ads mentioning Klarna by 20 percent.
The effort paid off with younger cohorts. Of Indochino customers using Klarna, 67 percent are millennials and Gen Zers. Klarna’s partnership with Stripe, Indochino’s existing payment platform, also enabled the made-to-measure brand to integrate Klarna payment options into its consumer checkout experience in four days.
Such a combination makes sense on the surface, with a June survey from eMarketer saying that 73.2 percent of BNPL users were millennials or Gen Zers 14 and older. Millennials are still anticipated to make up the greatest share of the user base through the end of eMarketer’s forecast in 2025. Last year, more than 40 percent of BNPL service users were millennials. That said, Gen Z is expected to take up more of this share over the next four years. By the end of 2022, 44.1 percent of Gen Z online shoppers ages 14 and older will have used BNPL services at least once that year, compared with only 37.2 percent of millennial online shoppers.
“Our aim is to make great fitting, personalized clothing accessible to everyone, so partnering with Klarna on Stripe to add more flexible payment options was a natural fit for us,” Alex Nazarevich, e-commerce director for Indochino, said in a statement. “We’ve noticed a shift in younger individuals, often at the start of their professional careers, who are suiting up with Indochino through Klarna. We’re looking forward to helping them continue to upgrade their wardrobes and become Indochino fans for life.”
The $45 billion fintech company’s Pay in 4 solution allows customers to split their purchases into four interest-free payments over time, while Indochino is paid upfront and in full.
Indochino isn’t just benefitting from BNPL capabilities, but rather is using other services within the Klarna for Business platform, which helps retailers accommodate shifting consumer preferences by offering them alternative ways to shop and pay that fits their budgets and lifestyles.
Klarna has continued to bolster this business offering with different content and marketing services beyond the payments technology it is traditionally known for, recently acquiring companies such as Hero, APPRL, Toplooks and Shoptail.
Indochino implemented the platform’s on-site messaging feature, tailoring it to inform shoppers about the different available payment options as they browse the site. The on-site messaging capability led to a 3x increase in sales through the Klarna platform, Indochino said.
The brand is leveraging Klarna’s co-marketing support towards paid Facebook and Instagram ads, highlighting Klarna as a payment option to reach new customers. Indochino said the in-ad messaging generated 18 percent lower costs per conversion.
“We’re really excited that our partnership with Indochino has enabled the company to reach a broader audience of shoppers who are refreshing their looks and seeking more transparent, flexible ways to shop and pay,” said David Sykes, head of North America, Klarna in a statement. “Klarna research found 89 percent of shoppers are updating their wardrobes by cleaning out their closets (72 percent) and investing in ‘going out’ clothes and new basics (54 percent). By joining forces with Klarna, Indochino supports shoppers who are seeking budget-friendly payment options within the high-quality men’s wear space.”
According to Klarna’s recent 2021 Reopening Report, 69 percent of shoppers say the pandemic changed their shopping habits, with 74 percent now looking for flexible payment options.
Klarna’s 250,000 retail partners include apparel sellers such as H&M, Nike, Saks, Macy’s, Asos, Ralph Lauren, Abercrombie & Fitch and Shein, among others.