Honey is a software extension that helps you find suitable coupon codes for the product you have sold. Honey was started in 2012 in Los Angeles with the sole purpose of helping buyers find genuine codes. It started small but with time, it got a lot of success.
Today, it works with more than 30,000 retailers. It has an extension for many browsers like Google Chrome, Mozilla Firefox, Microsoft Edge, Opera, and many other prominent browsers.
Within its short journey, it has earned a lot of loyal customers over time. These customers use the services of Honey almost daily for their purchases. Honey gets mostly used when they want to order pizza. It works more efficiently in this field because this idea came to co-founder Ryan Hudson when he could not get any reliable coupons when he was buying Pizza. In this article, we will look at the business model of Honey in detail.
Honey was started in 2012 with the intention of providing reliable information of coupons. The idea came to the co-founder Ryan Hudson when he could not find any reliable coupon to buy pizza. Even after finding a reliable coupon, he found that it was a tedious task to find proper codes. He thought of automating the process completely. He started coding the extension for the Google Chrome browser.
At first, Honey was not so successful. Both of the founders George Ruan and Ryan Hudson after developing their minimal viable product went to various investors who did not fund them at all. As a lot of investors were turning down their offer, the founders got frustrated. Soon they were out of funds and, Hudson started working in an ad tech company.
Things turned around when somebody mentioned Honey on Reddit. Soon Reddit started flooding with praises of Honey as people many had installed the extension and were delighted by its usage. In 2016, they managed to get their first funding of $4 million.
In 2017 alone, it had 5 million downloads. In 2020, the downloads reached to 10 million.
Business Model of Honey
Honey makes money from affiliate marketing. Honey does not have any deals with the stores directly. They work with various affiliate marketing platforms. Currently, Honey is working with about 20 affiliate marketing platforms. Their platform includes big companies like eBay, Rakuten, Groupon, Commission Junction, ShareASale, and many more.
Apart from that, the company has set up some unique ways to grow themselves. Honey has set up clever cashback programs which will help them retain customers. This will lead to the long-term growth of the Honey platform as it is increasing its customer base.
Honey has cleverly designed interfaces that would enhance compatibility with the user. It has a feature where it can compare different products of the same category and show their price comparison to the customer. Customers also receive a cashback under the Honey gold program. This increases the recall value of the customer. It also increases their market share.
How does Honey make money?
Basically, Honey earns money from affiliate marketing but it has many other features integrated to enhance its affiliate marketing business. Honey is a unique product and it has also positioned itself cleverly in order to capture the majority market share.
What is unique about Honey's Business Model?
Honey gold program
Honey has a gold program where they give customers some cashback from the affiliate earnings. Thus it is a win-win situation. Through this, Honey retains more customers. Also, the customer is benefitting by saving more.
In this droplist, you can check the cost drop for the selected item. It helps the consumers to make better decisions and, it also enhances consumer convenience.
Price history feature
You can also see the price history of the product with the Honey extension. It helps the customer make better decisions. For example, if the product is showing a periodical dip then, the customer can delay his/her purchase and wait till the price drops again.
Amazon's best price
With the extension, you can choose the best Amazon price. The honey extension shows the price of different products available for the selected item.
It automatically applies coupons from other prominent sites. This is the main feature why Honey is so attractive.
Honey PayPal Acquisition
Honey had slowly evolved from a small business to a billion-dollar evaluation company. They had specifically integrated such features which would enhance their customer adaptability.
With time it positioned itself competitively and grew as a unique company. Things started turning and, Honey generated revenue. Their business model worked perfectly and, investors flocked towards the company.
PayPal noticed the company and started negotiations with the founders. In 2020, January PayPal acquired Honey for 4 billion dollars. PayPal integrated Honey with its platform.
PayPal acquired Honey because they don't have much chance of collecting data from a user. Honey is an extension that plays a major role in the buying behaviour of the consumer and acquires those data. This data will help PayPal acquire more data regarding its users. This helps them understand the likes and dislikes of the people.
Honey has slowly but steadily grown its business. Initially, they started small and then went on to implement some clever strategies to make itself more user-friendly. They acquired more customers and retained them with much-shrewed techniques. Their step-by-step proper implementation has made them a huge success.
Who is the founder of Honey?
George Ruan and Ryan Hudson is the founder of Honey.
How does Honey app make money?
Honey makes money from the commission made on user transactions with partnering retailers.
Did PayPal acquired Honey?
PayPal acquired Honey for $4 billion in 2020.