A Bold E-commerce Play: PayPal Buys Honey


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In buying Honey, PayPal is making a bold Ecommerce play, going beyond the checkout page itself to compete in all the places people go to discover, browse, get inspired and hunt for the best deals.

Especially now that you can shop directly on both Pinterest and Instagram, PayPal needs to stay in the action lest it erode its share of the payment processing business in some key demographic age groups – Millennials and Gen Z.




Some powerhouse numbers


Currently, Honey has 17 million monthly active users, mostly younger shoppers under age 35. Honey’s money-saving tools enable them to track prices, get alerts, make lists, browse offers and participate in an Ebates-like rewards program called Honey Gold.



17 million monthly active users

>30,000 merchant partners

$100 million annual revenue (2018)

100% annual revenue growth rate (!)



275 million active accounts

24 million merchant partners

Source: PayPal press release

PayPal plans to integrate Honey’s offerings and technology into its platform, which includes both PayPal and Venmo. Venmo is an SMS-based payment system (pay with your phone) popular with the same age demographic as Honey.

PayPal’s network of 24 million merchant partners will be able to target more personalized promotions to consumers to both acquire new business and drive increased sales. PayPal Credit could also be integrated into Honey to help finance larger purchases.

Honey’s browser extension is used with over 30,000 merchant websites, including fashion, technology, travel and even pizza delivery. Last year, Honey reported that in 2018 its 10 million members saved over $800 million. By Q3 of this year, Honey has 7 million more members with a combined savings of $2 billion.




How Honey works today


Honey is basically a shopping comparison engine that tracks sales and retailers’ promo codes. It automatically tries all the eligible promo codes for you during checkout, then selects the most valuable one and inserts it into the promo code field on the checkout page. When shoppers can see that their getting the best deal, they feel more comfortable with their purchases. This reduces shopping cart abandonment.


The company has also rolled out newer features that inform shoppers of an item’s price history, including the historical pricing of any product on Amazon’s marketplace.




The strategy behind PayPal buying Honey


Besides Honey’s astonishing YoY revenue growth, there are other reasons that getting Honey is a sweet deal. PayPal says this purchase allows them to participate in the customer’s journey throughout the purchase funnel, from discovery to purchase and payment.

This bold Ecommerce play also gives PayPal a way to fight back against the increased competition from Apple, Google, Facebook and other tech companies that have entered the payments market in recent years. As we’ve written in this space before, the platforming of the shopping experience is the next major field of competition for the GAFA, as they jostle for supremacy in the collection of the “buyer ID card.”

Don’t be surprised when other payment processing companies (Visa, Stripe, etc) start up similar value-add services to stay competitive.

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Julie Stewart

My mission at Shoppingfeed is explaining how to leverage e-commerce platforms and SaaS technology to e-merchants who just want to run their business and make more money.

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