Ikea Invests in BNPL Service, Will Use Own Brand for Lending
Ikea’s majority parent company Ingka Group announced on Tuesday that they will join the buy-now-pay-later (BNPL) space with Jifiti, a group that offers flexible payment options. Jifti will also allow Ikea to keep their name, making it appear to consumers that Ikea is offering the service themselves — not a third party.
What separates Jifiti from other BNPL services is their willingness to allow companies to use their own names in the borrowing process, so the company themselves appear as the lender. This use of their own brand in the checkout process when offering the BNPL service encourages customers to use the service as Ikea’s brand recognition and reputation are universally top tier in their industry. Combined with their business model of cost efficiency and great service through do-it-yourself assembly, customers may be intrigued to use BNPL if they are under the impression that they are borrowing from a company they already trust.
Jifiti will require credit checks, and may charge interest to buyers who choose to utilize the payment options, but Ikea has the option to pay the interest on products financed through these services in a promotional capacity, to encourage customers to use the service to purchase more. By taking a stake of $20 million in Jifiti and not just using their service, Ingka group will be able to see how these tools are utilized and get insight on how the industry works between both the lending process, consumer payback, and default rates throughout Jifiti’s entire book of business.
This is one of the many moves in an exploration of the financial scene for Ikea’s parent company, as Ingka Group acquirred 49% of Swedish Bank Ikano in Feburary. It seems as if as the company is looking to host a full array of financial services both in store and online at Ikea sometime in the future.
Despite offering access to credit for more expensive items previously, Ikea will partner with Jifiti so that consumers can have access to flexible payment options on products that aren’t priced in the thousands. While it may encourage customers to overspend or indulge if they choose to use the service, those same customers will not be able to purchase in the future if they’re still paying off their previous purchases.Last modified: August 31, 2021
Adam Zaki is a Reporter at deBanked. Connect with me on LinkedIn or follow me on Twitter.