PayPal announced the acquisition of Los Angeles-based consumer shopping and rewards technology company Honey for $4 billion.
Launched in 2012, Honey has 17 million active users who use the platform to find savings as they shop online at more than 30,000 participating online merchants in every product category.
Honey says it has helped consumers save more than $2 billion since launching through its mobile shopping assistant, coupon codes, Honey Gold rewards program, and price-tracking tools and alerts
“Honey is amongst the most transformative acquisitions in PayPal’s history. It provides a broad portfolio of services to simplify the consumer shopping experience, while at the same time making it more affordable and rewarding,” said Dan Schulman, President and CEO of PayPal. “The combination of Honey’s complementary consumer products with our platform will significantly enhance our ability to drive engagement and play a more meaningful role in the daily lives of our consumers.”
Unlike many struggling technology companies, Honey says it reached profitability in 2018.
Sweet deals for shoppers
Honey started as a browser extension and has grown into a suite of free tools that help notify users when a price drops, shows the lowest prices available and provides information to help shoppers save on online purchases.
The background tracking of deals and automatic application of retailers’ promotional codes have proven popular and contributed to Honey’s fast growth and shopper engagement.
Honey says it has saved users more than $1 billion just in the past year and membership grew from 10 million in 2017 to more than 17 million presently.
PayPal gains stronger connection with consumers
For PayPal, the acquisition gives its merchants earlier access and more engagement with consumers en route to paying for products online.
“Honey’s vision has always been to give consumers the tools they need to make the best decisions with their money,” said Honey co-founder George Ruan. “PayPal shares that vision and together we can build powerful commerce capabilities that create real value for both consumers and retailers around the world.”
“Combining PayPal’s assets and reach with our technology, we can build powerful new online shopping experiences for consumers and merchants,” added Honey co-founder Ryan 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.”
Research shows that purchases of 69% of consumers are influenced by rewards programs and that 58% of consumers shop at stores whose loyalty programs they’ve joined at least once per month according to a report in Annex Cloud.
With more than 300 million global users and in excess of 24 million merchants, PayPal is betting Honey’s rewards programs and shopper engagement will convert into increased traffic and sales, and that seems to be the motivation behind its largest-ever acquisition.
Honey will retain its Los Angeles headquarters and its cofounders and 350 employees will join PayPal to expand and scale the rewards program.
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