Honey is a popular browser extension that helps shoppers save money online. Many people wonder how a free service can be profitable. Honey makes money through affiliate commissions from over 30,000 retailers when users make purchases using its coupons or deals.
The company’s business model is clever and benefits everyone involved. Shoppers get discounts, retailers gain customers, and Honey earns a commission. This win-win-win approach has made Honey very successful, leading to its $4 billion acquisition by PayPal in 2019.
Honey’s unique value proposition is that it’s free for users while still helping them save money and earn rewards. The service automatically finds and applies the best available coupons at checkout, making online shopping easier and more affordable for millions of people.
Key Takeaways
- Honey earns money from retailer commissions when users shop with its coupons.
- The browser extension is free for users and helps them save money on purchases.
- Honey’s success led to a $4 billion acquisition by PayPal in 2019.
Overview of Honey
Honey is a popular browser extension that helps users save money while shopping online. It automatically finds and applies coupon codes at checkout. The company has grown rapidly since its founding, leading to a major acquisition.
Founders and History
Ryan Hudson and George Ruan founded Honey in 2012. They wanted to solve the problem of finding working coupon codes while shopping online. The idea came to Hudson when he was ordering pizza and wished for an easier way to find discounts.
Honey started as a simple Chrome extension. It quickly gained popularity as users loved saving money effortlessly. By 2019, Honey had over 17 million users. The company expanded beyond coupons to offer cashback rewards and price tracking.
Honey’s success attracted investors. They raised $40 million in venture capital funding before their acquisition. The team grew from just two founders to over 200 employees by 2019.
Acquisition by PayPal
In a surprising move, PayPal bought Honey for $4 billion in cash in 2020. It was PayPal’s largest acquisition ever at the time. The deal aimed to help PayPal expand its reach in e-commerce.
The acquisition allowed Honey to keep operating independently. PayPal hoped to use Honey’s technology to improve its own services. They wanted to offer more ways for customers to save money while shopping online.
For Honey’s founders and early employees, the deal was life-changing. It turned them into millionaires overnight. The acquisition also gave Honey access to PayPal’s huge user base and resources.
How Honey Works
Honey is a tool that helps people save money while shopping online. It finds and applies discount codes automatically at checkout. The service works on many popular web browsers and mobile devices.
Browser Extension Functionality
Honey’s main feature is its browser extension. It works with Chrome, Firefox, Edge, Safari, and Opera. When a user shops on a supported website, Honey springs into action.
Here’s what it does:
- Scans for available coupon codes
- Tests each code automatically
- Applies the best discount at checkout
The extension also shows price history charts. This helps shoppers know if they’re getting a good deal. Honey can track products and alert users when prices drop.
Mobile App Integration
Honey offers a mobile app for iOS and Android devices. It brings the money-saving power of Honey to smartphones and tablets.
The app’s features include:
- Barcode scanning for in-store price comparisons
- Droplist for tracking desired items
- Honey Gold rewards program
Mobile users can browse deals and earn cashback rewards. The app syncs with the browser extension, creating a seamless experience across devices.
Affiliate Marketing Explained
Honey makes money through affiliate marketing. When a user buys something using a Honey coupon, the company earns a commission.
The process works like this:
- Honey provides a discount to the shopper
- The shopper makes a purchase
- The store pays Honey a fee
This model benefits everyone. Shoppers save money, stores increase sales, and Honey earns revenue. The company partners with over 30,000 retailers across various industries.
Revenue Streams
Honey has two main ways of making money. These involve partnering with retailers and offering rewards to users.
Affiliate Commissions Structure
Honey earns most of its revenue through affiliate commissions. When users make purchases via Honey, the company gets a cut. These commissions vary by retailer and product type.
For some high-end fashion items, Honey’s commission can be up to 20%. The exact percentage depends on the deal with each store.
Honey works with over 30,000 retailers. This large network helps ensure a steady income flow.
Honey Gold and Rewards Program
The Honey Gold program is another revenue source. Users earn Gold points when shopping through Honey. These points can be traded for gift cards.
Typically, 1,000 Honey Gold points equal a $10 gift card. Honey makes money when users redeem these rewards at partner stores.
This program keeps users coming back to shop through Honey. It also provides extra income for the company.
The rewards system creates a win-win situation. Users save money, and Honey increases its profits.
Saving Money with Honey
Honey offers several features to help shoppers save money while shopping online. These tools make it easy to find discounts and get the best deals without extra effort.
Automatic Coupon Discovery
Honey’s browser extension scans websites for available coupon codes. When a user is ready to check out, Honey tests all known coupons automatically. This saves time and ensures the best discount is applied.
The extension works on over 40,000 websites. Users don’t need to search for codes manually. Honey tries each code and picks the one that saves the most money.
Sometimes Honey finds codes that aren’t public. This can lead to bigger savings than shoppers would find on their own.
Exclusive Deals and Droplist Feature
Honey partners with stores to offer special discounts to its users. These deals may not be available elsewhere.
The Droplist tool lets shoppers track items they want to buy. Honey watches the prices and alerts users when there’s a good deal. This helps people avoid overpaying.
Droplist works for 30 days. It’s useful for big purchases or items that often go on sale. Users can set a target price and get notified when it’s reached.
Amazon Price Comparison Tool
Honey has a special tool for Amazon shoppers. It looks at the price history of items on Amazon. This helps users know if the current price is good or if they should wait for a better deal.
The tool shows the lowest and highest prices over time. It also compares prices from different sellers on Amazon. This is helpful because Amazon’s prices can change often.
Users can see if an item is at its best price or if it might drop soon. This feature helps make smarter buying choices on Amazon.
User Experience
Honey aims to make online shopping easier and more affordable. The browser extension helps users find deals and save money with minimal effort.
User Privacy and Data
Honey collects some user data to provide its services. This includes browsing history related to shopping. The company says it doesn’t sell personal info to third parties.
Users can control what data they share. Honey offers options to limit tracking. The extension only activates on shopping sites.
Some people worry about privacy with browser add-ons. Honey tries to be clear about its data practices. They explain how they use info in their privacy policy.
Average Savings Achieved
Honey users can save quite a bit of money. The typical user saves $126 per year on average. This adds up over time!
Savings vary based on shopping habits. People who buy more online may save more. Honey works with over 30,000 stores. This gives lots of chances to find deals.
The extension automatically tests coupon codes. This saves time and frustration. Users don’t have to search for coupons themselves.
Partner Network
Honey’s success relies on its vast network of merchants and retailers. The company collaborates with thousands of partners across different industries to provide savings for shoppers. This network allows Honey to offer deals on various products and services.
Merchant Partners and Retailers
Honey works with over 30,000 retailers in many shopping categories. These partners include big names in fashion, electronics, and travel. When users shop at these stores, Honey can find and apply coupons automatically.
The company doesn’t work directly with all these stores. Instead, it uses affiliated networks to connect with merchants. This setup helps Honey track sales and manage commissions.
Honey’s partners benefit too. They get more customers and sales through Honey’s platform. It’s a win-win for both sides.
Expansion to Other Marketplaces
Honey keeps growing its reach. It now works with popular online marketplaces like eBay. This growth lets users find deals on even more products.
The company doesn’t stop at just one type of shopping. It covers:
- Fashion items
- Electronics
- Travel bookings
- Home goods
- And more!
By expanding to new markets, Honey helps more people save money. It also earns more through commissions. This smart move keeps both shoppers and partner retailers happy.
Market Position
Honey has become a major player in the online coupon and deal-finding space. It has grown its user base rapidly and faces competition from other popular browser extensions and apps.
Competitors in the Coupon Space
Honey faces stiff competition from several other coupon and cashback services. Rakuten is a big rival, offering cashback and coupons through its browser extension. RetailMeNot provides coupon codes and deals for many retailers.
Ibotta and Fetch Rewards focus more on receipt scanning for cashback on groceries and other purchases. Karma (formerly Shoptagr) helps users track prices and find coupons, similar to Honey.
Despite the crowded field, Honey has managed to stand out. Its automatic coupon-finding feature sets it apart from some competitors that require more manual searching.
Brand Growth and User Base
Honey has seen impressive growth in recent years. It now partners with over 30,000 retailers, giving users access to a wide range of deals.
The company’s user-friendly browser extension has helped it gain popularity. Honey makes it easy for shoppers to find savings with just a click.
Brand awareness has increased significantly since PayPal acquired Honey in 2020 for $4 billion. This deal gave Honey more resources to expand its reach.
The number of active Honey users has grown steadily. Millions of people now use the service to save money while shopping online.
Looking Forward
Honey has big plans to grow and offer more ways to save money. The company wants to make shopping online even easier and cheaper for people.
Honey’s Future Plans and Projects
Honey aims to expand its partnerships with more online stores. This will give shoppers more chances to save money on different websites.
The company also wants to improve its mobile app. They plan to add new features that make finding deals on phones simpler.
Honey is looking into using artificial intelligence to predict price drops. This could help users know the best time to buy things they want.
There are also plans to offer more personalized deals. Honey might suggest coupons based on what a person likes to shop for.
The Honey Gold rewards program may get updates too. New ways to earn and spend points could make saving even more fun for users.
