PayPal acquires maker of shopping extension Honey for $4 Billion
PayPal announced the acquisition of Honey Science Corporation on November 20, 2019. The acquired company is best known for its shopping extension Honey.
Honey is one of the most popular extensions for Google Chrome; in fact, it is one of the few extensions that crossed the ten million user mark on the Chrome Web Store. The extension is also available for other web browsers including Firefox and the classic Microsoft Edge web browser.
Honey is a shopping extension that looks up items at other retailers to provide potential shoppers with coupons or better prices. The main idea behind the extension is to inform users if the item is available for a better price elsewhere or if coupons are available to reduce the price on the active site.
The technology that Honey uses tests coupons semi-automatically on the shopping site and may apply the best coupon that works to the checkout process automatically.
The service is also available as a mobile application -- called Honey Smart Shopping Assistant -- and there are also options to browse available coupons and promotions on the official website. Honey may furthermore track item prices for its users to inform them when the price of an item drops below a set threshold.
There is also a rewards program called Honey Gold which rewards members with a virtual currency that they may redeem for gift cards.
Honey earns money from affiliate commissions. Whenever users of the browser extension or site make purchases, Honey earns a percentage that is paid by the shopping site.
Honey claims that it saved its customers $1 billion in the past year alone, that it has 17 million active users per month, and it works across 30,000 online retailers.
According to Forbes, Honey made an estimated revenue of about $100 million US Dollars in 2018.
PayPal revealed that it paid "approximately $4 billion" US Dollars for the company and its products. The company wants to combine Honey with PayPal's "two-sided network" to "transform the shopping experience for PayPal consumers" and to increase "sales and customer engagement" for PayPal merchants.
PayPal has not mentioned specifics in regards to integration of Honey in PayPal products or vice versa. It seems likely that Honey and PayPal will benefit from the deal in the long run.
Honey co-founder Ryan Hudson provided the following statement.
"Combining PayPal’s assets and reach with our technology, we can build powerful new online shopping experiences for consumers and merchants,” said Hudson. “We’ll have the ability to help millions of retailers efficiently reach consumers with offers that deliver more and more value to Honey members."
Four billion is a huge sum of money for a browser extension and technology. It is too early to tell if the acquisition will have a negative impact as well.
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