American shoppers spent a record $9.4 billion online on Cyber Monday, up a healthy 19.7% from last year. And some portion of those shoppers made their purchases through the plug-in Lolli specifically in order to earn bitcoin—so many that Lolli says it saw an 88% bump in transactions on Cyber Monday.
Lolli, launched in August 2018, is a web plug-in that gives online shoppers cash-back rewards in the form of bitcoin. It is not a tool for paying with bitcoin; shoppers still make their purchases in fiat currency with a credit card, but the cash back comes in bitcoin deposited to a Lolli wallet. (Very few mainstream ecommerce sites accept bitcoin as payment, though Overstock.com was one of the first.)
Think of Lolli as a Honey (the online-shopping rewards plug-in that PayPal acquired for $4 billion) for bitcoin, a comparison Lolli CEO Alex Adelman welcomes.
The bitcoin reward percentage you can get through Lolli varies depending on the retailer, but the average rate is 7%, much higher than the typical 1% to 2% rewards rate from most credit cards. Lolli’s highest rewards rate currently is 37% from PureVPN, which sells private-network services; eHarmony offers 27% bitcoin back through Lolli.
And Lolli has signed on some much bigger retail names than those: Walmart, Macy’s, Ulta, Bloomingdale’s, Hilton, Sephora, Petco, Priceline, Expedia, Groupon, and Saks Fifth Avenue are among them. All of Lolli’s 900+ retail partners agree to pay Lolli either a flat fee or a cut of each sale that comes to them through Lolli.
And yet none of these companies have come out publicly to declare their support for bitcoin.
“They don't do that for Honey either,” Adelman replies. “The biggest reason is we are just a loyalty, cash-back platform at the end of the day, as far as they're concerned. So they're excited about the possibility of new shoppers, but it's on us to bring them those people. They're fine with us talking about it, marketing it, but at the end of the day it comes out of their margin to give bitcoin back, so a lot of merchants would rather just have users pay full price or offer their own coupons to their own loyal users.”
True story: I made all my Cyber Monday decisions based off of which companies were integrated with @trylolli 🍭— Zayi (@ZayiRey) December 3, 2019
Walmart (WMT) was a big coup for Lolli and is unsurprisingly one of the top five most popular retailers with Lolli users, but there are still some very big ecommerce names it has not been able to woo. Adelman declines to name names, but Lolli’s rabid fans on Twitter constantly tweet at the company to ask when they will add Target and Amazon.
In Adelman’s view, the big names Lolli has been able to add so far are “using Lolli as a way to test bitcoin. They don't want to do big announcements, but this is an easy way for them to test the waters. They don't have to do any kind of program or take on any risk, we take on all the risk, and they get to test the market,” he says. “If I can go to Walmart in five years and say, we have several million users and we drive traffic to your site, that's when they might get really excited about bitcoin and announce some things around bitcoin.”
Lolli doesn’t share its total number of users or how much its users have spent through Lolli. But the company says it recently passed an average of $30 per Lolli bitcoin wallet (users rarely transfer the bitcoin they’ve earned out of their Lolli wallet, though they do have that option), a figure Adelman says reflects multiple purchases made through Lolli.
PayPal’s massive purchase of Honey was fueled by Honey’s 17 million active users; Lolli is obviously much smaller, but Adelman says he’s encouraged by that deal. “Honey brought coupons to a lot of people; we are bringing bitcoin to people and making it easier than going onto an exchange and buying it,” he says. “The reason PayPal bought Honey is that if you can build a wallet and have loyal active users at the point of purchase, you're already halfway there, and that's what Honey brings them. And Lolli is going to do with bitcoin payment rails what I don't think PayPal is ever going to do in the foreseeable future.”
To be sure, making a pitch around a bitcoin wallet with high loyalty still does not carry much appeal for established ecommerce giants. “We pitched bitcoin payment rails to a lot of merchants five years ago, but none of them wanted bitcoin payment rails because of the volatility,” Adelman says.
But he says that if and when bitcoin catches on enough that people want to start spending it, rather than just holding it, Lolli will be well positioned. “When people start wanting to pay in cryptocurrency, we're going to be right at the intersection of shoppers and merchants,” he says. “When there's an advantage to spending bitcoin, or Libra, or whatever cryptocurrency is the most pervasive, we will be at a really good point for people who want to do that.”
Daniel Roberts covers bitcoin and blockchain at Yahoo Finance. Follow him on Twitter at @readDanwrite.