(You can read more of our original ideas in our archive. You can order a business plan of this idea here.)
Problem: Online shopping or subscription services does not reward long-term affiliations or habit making for customers.
Solution: Loyalty points for online shopping (an idea similar to “Frequent Buyer Points” which was posted in September 2020). This business would create an extension for Google Chrome Browsers, Microsoft Edge Browsers, and more to make receiving rewards points as simple as installing Honey.
The idea of building a business from an extension is actually not new one: in November 2012, Ryan Hudson and George Ruan founded Honey, a chrome extension to help users apply rewards points. In an interview with Scott Matteson of TechRepublic, George explains the business as it was positioned in May 2013:
We came up with the idea because we're engineers who like to automate everything. We're also smart online shoppers who always Google for coupon codes before buying anything online. But the process is tedious (checkout, open another tab, Google for [store name] + coupon, try and apply codes). So we built Honey for ourselves, but it turns out it solves a universal problem. Since launch a few months ago (Nov, 2012), we've seen over 280,000 organic installs. Honey works extremely well on sites like GoDaddy, with an average saving of 40%.
Developing Chrome extensions is very easy. We wrote the frontend in JavaScript and CSS and published it to the Chrome store with a Google Developer account. It's also possible to create private extensions that a company can use internally. For example, our developers created a separate private extension we use to manage data internally. Honey's proof of concept prototype took three weeks to build. When it took off virally, we (a team of three) rebuilt everything from the ground up in a scalable way that can support millions of users. That process took about three months.
While building a chrome extension business was unheard of 8 years ago, today it’s part of the new normal with podcasts about “Building a Chrome Extension Business,” online courses on the topic, tutorials about building chrome extensions, and can be extremely profitable (Honey was making $100M a year and was acquired for $4B).
Some of the direct competitors include Honey Gold (this allows users to earn a digital currency to be redeemed in exchange for gift cards: their gift cards can be redeemed at over 5,500 partner stores, including Microsoft, eBay, or the Home Depot) and Microsoft Rewards (which has more than 400,000 users). In the physical world, competitors include Fetch (“a mobile savings and gift cards earning app that rewards you for the purchases you already make or the restaurants you dine in. Just snap pictures 📷 of your receipts or eReceipts”), Drop (“A new kind of rewards program” that allows you to link your credit card to receive deals), and Snackpass (“One mobile app, online ordering, contactless digital menu, self-service kiosk, and loyalty rewards platform”).
A few product innovations that this business could adopt is Snackpass’ “get one give one” rewards model along with Honey Gold’s gift card exchange and Fetch’s ability to scan receipts for rewards. Another addition for engagement could be a social feed similar to Venmo and rewards points for subscription services.
As per the report published by Fior Markets, “the global loyalty management market is expected to grow from USD 6.54 billion in 2019 and to reach USD 25.26 billion by 2027, growing at a CAGR of 16.2% during the forecast period 2020-2027.” Similarly, in the gift card market “despite near-term challenges, medium to long term growth story of gift cards in United States remains strong. The gift card industry in United States will continue to grow over the forecast period and is expected to record a CAGR of 9.2% during 2020-2024. The gift card market in the country will increase from US$ 163 billion in 2019 to reach US$ 221 billion by 2024.”
Monetization: Following Honey’s model: affiliate fees/commissions.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)