Why do retailers put up with Honey? They're clearly not providing value with the attribution theft. Why give them money?
https://en.wikipedia.org/wiki/Price_discrimination#Coupons
It's unclear whether banning price discrimination as a whole is a good thing. Is it really a bad thing that people with more money pay more, and people with more time can get a discount?
Yes, it is. It is blatantly unfair to charge different people different prices. You can illustrate this with a thought experiment: nobody would think it's ok if I charge Joe $5, but charge Bob $10 because I don't like him very much. Price discrimination is very much the same thing, just with the mechanism obfuscated and dressed up in pretty language so that it doesn't trip people's "this isn't right" detector as easily.
Are you sure? People often cheer on this kind of thing if they also think Bob's an asshole. (And there's no rule against it in most places unless you don't like Bob for fairly specific reasons)
This isn't as airtight proof of "unfair" as you think it is. Moreover this happens all the time without people being outraged. McDonalds might charge Joe $5, and Bob $10 for the same burger, because McDonalds likes Joe very much for using their app, so they send him offers.
Even if we do grant that charging people different prices is fundamentally "unfair", it leads to all sorts of strange conclusions. For instance if some retailer has some product on discount today only. Is that also "unfair"? I don't see how "buys a fridge on Wednesday rather than Thursday" is a morally justifiable reason to give different prices than say, being able to scout out a coupon or not. Should we ban time limited sales as well?
McDonalds gives people deals in their app because it tricks people into installing the app which they use to collect their customer's personal data (even when they aren't using the app) which they can sell or exploit in any way they see fit. It's a terrible deal for the customer, but they don't know any better because they don't get to see how that data is used against them.
Price discrimination leads to exploitation and enables bigotry. We've been being conditioned to accept it because ultimately companies want to abuse it to make more money at your expense. The only thing standing in their way is that most people understand that discriminatory pricing is unfair and dangerous https://link.springer.com/article/10.1057/s41272-019-00224-3
If McDonalds had to choose one price for an 8 piece nuggets, they would have to make a choice to either be ultra cheap, and anyone could happily afford those McDonalds nuggets like it was the 80s again, or they could choose to target up market, in which case they would compete with other expensive nuggets and some other business could take the market share for "extremely cheap nuggets"
Price discrimination distorts natural market forces that would otherwise drive competition, create opportunity, or "punish" hostile practices.
Then you miss the point of the coupon codes, they're for measuring ad effectiveness. The discount is the incentive for the customer to reveal to the business where they learned about the product and who was responsible for the sale.
But not everyone is equally fortunate, and for some people the time investment to find the right coupon might be what makes them able to afford a necessity.
That's not all of what coupons are for.
They're also a form of advertising. If you give them out to an influencer in your niche who can bring you great customers, you can make a lot of extra profits.
Imagine you're making an app for managing hair dressing salons. If there's a particular Youtuber popular among hair dressing salon managers, you can do a deal with them where their viewers get 20% off on the first year of their subscription to your app, and the influencer gets an extra 3% of that revenue.
You do this because you expect that people watching that channel are already hair dressing salon managers, and hence are very likely to become big spenders with your company once they start using your services. It's a great deal for everyone.
Honey turns that on its head by indiscriminately offering that influencer's valuable voucher code to everyone, reglardless of whether they've seen any of their videos.
And if the retailer REALLY wants to keep the 20% discount for a particular use-case, make it a targeted discount for certain user accounts?
E.G. if the retailer normally pays at 300 bps to their affiliates for a particular transaction, Honey may only get 100 or 50 bps.
It's a choice between e.g. Honey giving every customer of vendor X a voucher code from a particularly valuable influencer in X's niche, which gives 30% off on first orders, versus giving them a 20% discount and taking 1.5% for itself.
This is a great deal for the retailer, they go from -30% to -21.5%, it's a great deal for Honey because that kind of money on millions of transaction is a lot of money, and it's a great deal for users, as Honey wouldn't even exist without this scheme, and they'd get 0% off instead of 20.
well
sigh
They're not guiding the user to shop a or shop b, they're
- redirecting the attribution away from the actual affiliate (could hurt shops because their affiliates become unhappy and advertise their competitors)
- automatically applying coupons that decrease the shop's margin.
How are they "great business partners"?
Influence can be bought on the cheap. MrBeast says use Honey, you use Honey. Are you going to not partner with the business that is smart enough to partner with MrBeast?
In terms of being "great business partners". The affiliate space like other industries requires a team of people on the retailer side and Honey's side talking to each other and establishing a relationship. Here is a random article I just Google'd that sheds a bit of light about that relationship. https://www.advertisepurple.com/affiliate-spotlight-a-conver...
Other than fear of the court of public opinion, possibly stoked by one or more of their competitors, if they don't…
You could probably be clever and come up with a more complicated discount scheme that's not so easy for Honey to take advantage of, but that adds complexity for users as well.
Shit system, shit value for the client, and still it looks like some people would kill for a 5% one-time discount on anything.
People will buy a thing that is 90% off reduced from $99 in preference to buying the identical thing for $5 with no discount.
I think for some it taps into the same reward neurons as winning £10 on a lottery after paying £1 in week-in-week-out for years. It feels like a win, and that for many overrides any desire to properly analyse the matter (did I actually save, with the coupon, or save 5% on something that has been marked up 20%? (or buy something I didn't really want at all?!)). Same with BlackFriday, many of Amazon's “prime day” offers, and so forth.
[Also not American, I'm a UKian/ex-EUian, it is not uncommon to see the same here, just not in the big way some Americans tend to go with almost anything]
Yes, many retailers are struggling. Perhaps affiliate links and cash back are not the best way, but it's not the only way that retailers try to be successful.
If you were a suit working at a retailer with budget to spend with the goal of getting a return on investment, maybe you would personally avoid spending the money on affiliate links. But get this, the TOP, BIG, SUCCESSFUL retailers all have data showing that the affiliate system makes the numbers go up. Even if they don't understand the system, they just care about the numbers.
The only metric business people care about is whether the lead converts into sales. People often don't want to think about how the hotdog was made at the factory. =3
Lknk to the AMA: https://www.reddit.com/r/IAmA/s/lEGdq1Sx9d
This is what happened when Ron Johnson tried to rebrand JC Penny. JC Penny customers were used to "deals" through coupons. He changed the pricing so the prices were lower, across everything, all the time. The classic JC Penny customer hated this. They ultimately pay the same amount, it would be less work for them, but it wasn't a "deal".
Amazon plays on this too with the crossed out inflated "typical price", and then showing the actual price you'll pay. No one ever pays that crossed out price; it can say anything, but lets them put "-40%" so people get excited and buy.
It's all very manipulative. Honey was just another form of the same concept.
Honey gets additional ire, for what they did beyond that. Coupons are manipulative, but Honey was also lying to pretty much everyone involved in the transactions, as well as their advertising partners.