written by Melody Flumendorf
Also called point of sale loans, they break down your purchase into smaller sums. That way, you can buy something you don’t have the money for right now. For consumers, it means that they can buy things immediately without needing to save up for them. That kind of financing originated in the United States, where lenders like Klarna, Afterparty, and Affirm offer loans to customers of big retailers like Macy’s and Walmart. The Swedish firm Klarna was set up in 2007 by Sebastian Siemiatkowski. According to the funders, the idea was to make online payments easier and safer. By now, the company is worth $2.5bn. Many retailers offer Klarna on their website because it usually increases spending. Klarna says it can increase the average online store’s order by 30% and overall spending by 34%. That’s a lot of money for retailers struggling during the pandemic.
Klarna makes it possible to purchase a bunch of clothes, try them on and only pay for those you keep. Since you only have to pay 14 to 30 days after buying the items, many people struggling with cash flow prefer this option instead of paying upfront. And here lies the problem.
Did you know that every time we buy something, our brain gets a little dopamine rush? That’s why we get so hyped up about fancy candles and that funny card in the shop, but often can’t remember what we bought once we arrive home. We not only buy when we need something, but also because it feels good. Since we don’t have unlimited space and money, we have to find ways to curb our spending. Our body won’t do that- it loves the good vibes after a purchase. With apps like Klarna, it becomes easing to get our dopamine rush. In fact, it becomes TOO easy. “Buy now, pay later” encourages you to buy for the sake of buying. That’s not our goal here at Vinokilo.
Getting credit via Klarna is easy and takes minutes. You can buy things you don’t need or can’t really afford while waiting for your train to arrive or during your lunch break. That makes it easier to forget what and how much you bought. Suddenly, you find yourself with a pile of bills you didn’t anticipate. And paying those is more complicated than spending money.
Although you won’t face any additional fees or interests, you are charged a fine for late payments. That can lower your credit score and make it harder for your to get a mortgage later. In a survey, two out of three shoppers said “buy now, pay later” caused them to spend more than they would have otherwise. In extreme cases, debt collecting institutions might enter the scene. We want our customers to always be aware of how much they’re spending and on what.
Almost 90% of transactions using Klarna fall into the fashion and footwear industry. Many of the companies offering Klarna are in the fast fashion industry. Their clothes are often not worth reselling and are often thrown away when returned. All these impulse buys bring environmental issues with them and make our planet worse for the wear. Half of the clothes sold by online brands are made from new plastic, not recycled ones.
One of the many reasons we have our Vinokilo events is to make sustainable shopping enjoyable. Shopping as a social experience means enjoying the banter with friends and browsing for a new item as much as the purchase. We want you to get your dopamine hit from the mix of community and fun- it lasts longer and is better for you and the planet.
So there you have it- the reason why we don’t offer loans like this. Because, in essence, that’s what they are. Vinokilo thinks you shouldn’t take out loans to buy clothes, no matter how that looks.
Do you agree or not? We would love to hear what you think in the comment section below.
Vinokilo offers second hand clothes but there are of course products outside of the realm of second hand clothes. This is one focus whilst another is finding alternatives sustainable ways of producing. Thereby enlarging what a brand like Vinokilo and what we stand for can offer. With beautiful day to day objects and alternatives it's another way to make sustainable living a bit easier for you.read →