PayPal has agreed to acquire browser extension Honey for approximately $4 billion. The acquisition, which is PayPal’s largest to date, will transform the customer's shopping experience.
Honey has helped its 17 million monthly active users save more than $1 billion in the past year with its suite of products and services that include sales alerts, price-tracking tools, offers, and rewards programme. Hone work across approximately 30,000 online retailers.
PayPal hopes to add Honey’s tech to its own product line to expand its reach to PayPal’s 300 million users. What’s more, PayPal’s network of 24 million merchant partners will be able to offer more personalised promotions to users to drive sales and increase customer engagement.
“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 in a statement.
Co-founders Geroge Ruan and Ryan Hudson will continue to lead honey’s team and join PayPal to work on product integration and scale the technology to a larger user base. Honey’s headquarters will still be in Los Angeles, California.
"Honey's vision has always been to give consumers the tools they need to make the best decisions with their money," said 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," 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."
Honey was profitable on a net income basis in 2018, PayPal notes. The acquisition is expected to take place in Q1 of 2020, subject to approval. There will be a conference call today to discuss the transaction in more detail.
This announcement and acquisition figure is the highest to be reported for a browser extension/cashback website, surpassing last year's £1 billion deal of US-based cashback publisher EBates to Rakuten.
Sharing his thoughts on PayPal's largest transaction to date and what this means for the industry going forward, co-founder and CEO of RevLifter Simon Bird said that the buyout "highlights how critical it is to gather as much data as possible about who your users are as early on as possible during the customer journey."
"If you understand the deal discovery journey, you are more likely to develop relevant features. In Honey's case, they target a younger crowd, mainly Millennials who are always looking for better deals and are savvy by nature. What's interesting is that PayPal has 300m+ users, so there are great synergies if you compare to the 17m+ Honey users. I can only assume that PayPal / Honey will be able to offer a more complete experience: deal discovery, price tracking, offers & loyalty programme and smoother checkout," Simon commented.
"PayPal has partnered with 24m merchants, so they will be able to develop more tailored/bespoke solutions which gives PayPal a huge competitive advantage vs. VISA, MasterCard, etc. and enables them to build a fantastic shopping experience across the full spectrum from merchants to consumers. I believe price tracking is a key feature, especially for time rich and cash poor consumers who are always looking for bargains," Simon continued.
"From a RevLifter point of view, this hugely validates a major part of our approach where we link a retailers' first-party data creating offers and rewards in real-time to consumers to maximise a retailer's goals in real-time (on and off a retailers site). What this means for the industry is a sage reminder on a renewed focus on the value of data, how we collect, organise, and share, and ultimately unlock the value of this data. We also need to be aware of how this works with the wider e-commerce and payments industry and how we create wider value in the ecosystem. It also highlights the value of how the affiliate channel can help solutions like Honey grow quickly on a global stage."
"PayPal's acquisition of Honey comes as no surprise and goes to show where the industry is moving," said Marc Vallverdu, UK MD at Global Savings Group; "We have seen more and more recently that one of the key priorities to success in our industry is all about making the shopping experience easier and better for consumers at every stage of the purchasing funnel - browser extensions are a critical step in this process. We have seen tremendous growth for our retail partners this year alone - for example, in the UK, we expect to drive more than £700 million in gross market value to our partners."