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Ecommerce Profit Calculator: Estimate Your Losses to Coupon Extensions

by Marshall Moritz, on Sep 21, 2021 4:50:16 PM

Coupon extensions like Honey and CapitalOne Shopping, which users install on their browsers to automatically apply coupons to their checkout carts, are continuing to grow in popularity and breadth.

And while these browser extensions often position themselves as affiliate platforms helping to drive customers to online businesses, they actually do more harm than good.

Because these extensions automatically inject discount codes at the moment of conversion, shoppers are actually arriving at ecommerce websites through established marketing channels only to receive discounts at the very last stage of their buying journey, on items they were willing to pay full price for.

This means instead of helping drive sales, coupon extensions are unnecessarily taking bites out of your overall ecommerce revenue. 

Calculating Your Estimated Losses

Data from 50+ ecommerce websites using cleanCART shows that roughly 4.5% of shoppers who reach check out have coupon extensions installed on their web browsers, 

These extensions on average generate 11-13% in savings per transaction for those customers—or, put differently, reduces order value by 11-13% for online retailers.

Mobile browser extensions are still an emerging technology, so orders affected by coupon extensions primarily occur over desktop devices, which make up 33% of all transactions online. (Note: This is about to change with Apple’s launch of iOS 15 on September 20, 2021, which will include the ability to use coupon extensions in Safari Mobile)

Therefore, calculating your total losses to coupon extensions would look like this:

  1. (Total Revenue x 33)/100 = Estimated Total Desktop Revenue
  2. (Total Desktop Revenue x 4.5)/100 =  Estimated Revenue Affected by Coupon Extensions
  3. (Revenue Affected by Coupon Extensions x 11)/100 = X
  4. (Revenue Affected by Coupon Extensions x 13)/100 = Y

Your total estimated revenue lost to coupon extensions will then be somewhere between X and Y.

 

For example:

  1. ($100M x 33)/100 = $33M
  2. ($33M  x 4.5)/100 =  $1.4M
  3. ($1.4M x 11)/100 =  $154K
  4. ($1.4M x 13)/100 = $182K

So with an annual revenue of $100M, your estimated revenue lost to coupon extensions like Honey and CapitalOne Shopping would fall somewhere between $154K and $182K 

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iOS 15 Adds Mobile Browser Extensions

With Apple recently announcing the addition of browser extensions to the Safari mobile browser with the launch of iOS 15 (scheduled for September 20, 2021), we expect to see revenue lost to coupon extensions nearly double.

Mobile iOS transactions make up roughly 50% of all online purchases. If the same amount of users were to now install and use coupon extensions, calculating your additional losses would look something like this:

  1. (Total Revenue x 50)/100 = Total Desktop Revenue
  2. (Total Desktop Revenue x 4.5)/100 =  Revenue Affected by Coupon Extensions 
  3. (Revenue Affected by Coupon Extensions x 11)/100 = X
  4. (Revenue Affected by Coupon Extensions x 13)/100 = Y

Or 

  1. ($100M x 50)/100 = $50M
  2. ($50M  x 4.5)/100 =  $2.25M
  3. ($2.25M x 11)/100 =  $247K
  4. ($2.25M x 13)/100 = $292K

Meaning, with annual revenue of $100M, you could have an additional $247K - $292K, for a total of $401K - $474K in losses due to desktop and mobile coupon extensions.

 

How To Protect Your Margins

As coupon extensions continue to grow in popularity and expand to new technologies and markets, it's unlikely you will see this problem go away on its own. 

In fact, things are probably going to get worse.

There are a number of manual solutions that can help mitigate damages, but these can be time consuming and are far from permanent solutions.

If you are looking for a one-stop, set-it-and-forget-it solution that will put an end to the automatic injection of coupon codes for good, partnering with cleanCART is your best bet. 

Our unique solution blocks the automatic injection of coupon codes instantly with no negative impact on the user experience. With cleanCART in place, coupon extensions will simply inform users that they have already received the best price. Along with this, you will also have access to a customized dashboard to help track which codes are being attempted and by which extension, giving you a stronger understanding of the health of your ecommerce discount strategy.

If you are interested to see how cleanCART can help protect your discount codes and improve your ecommerce margins, you can sign up for a free trial here.


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Topics:ecommerce

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