Paribus has revolutionized the concept of consumer saving by helping users get the best deal for their money after their purchases, rather than before, like many pre-existing players in the space. Instead of acting as a search engine through which users can find the best prices, or provide users with coupons, Paribus backtracks all of their users’ purchases.
All successful entrepreneurial companies are built to address a specific problem. So, what exactly were Eric Glyman and Karim Atiyeh looking to fix when they founded Paribus in 2014? The two Harvard grads observed that most retailers have policies in place to refund consumers if the price of their purchase subsequently drops. They also noticed that the odds are stacked against the average consumer, who lacks the advanced technology in an age where complex data systems and algorithms dictate what you see online. Hence, the company’s slogan: “stores owe you money, we’re gonna get it for you.”
The core issue is that consumers rarely have the time, resources and, most importantly, the memory to go back and check for price drops. They also lack the incentive to spend their scarce free time in calling or emailing the retailer to get refunded.
How the Magic Happens
Paribus collects your refunds from stores for you, in part by scanning your emails for receipts from your purchases. In today's digital world, most purchases require email verification and many in-person retailers will email you a receipt instead of, or in addition to, printing it out for you.
First, Paribus identifies your receipt, evaluates the data and imports it into its database. The key piece of data is the price at which you bought the item. Your refund period generally lasts for about two weeks, during which Paribus will monitor the cost of the product and submit a refund request on your behalf if the price indeed drops.
The trade-off for some consumers is the number of personal details that the startup will request from you. Paribus needs access to your email account and credit card information in order to ensure delivery of their portion of your refund through commission fees. Before writing off the service, users hesitant to share this information should do a thorough cost-benefit analysis on what type of person they are in regards to their spending habits and then determine whether sharing some personal information with Paribus is worth the potential amount of savings that they could receive.
How Does Paribus Make Money?
If Paribus receives your refund, they retain 25% of the amount (and you only get charged if the company does their job and saves you money). This percentage may seem like a huge chunk of the refund, but it’s definitely better than nothing. Depending on the individual, especially someone who tends to ignore their big-ticket purchases after their credit card swipes, using Paribus could be a gold mine. An alternative option some consumers use is through their credit-card providers, some of which advertise that they will refund you for a price change. Typically, consumers are required to send in documentation of the price change and a claim to their credit-card issuer.
What's the Hype?
At times, consumers are being essentially duped into buying items at a higher price, as some sites have the ability to raise prices after a consumer has viewed the site more than once. Advanced algorithms are used for dynamic pricing, which takes into consideration many factors beyond traditional supply and demand. E-commerce leader Amazon.com is known for its frequent price fluctuations. Few people have the time and patience to keep track of this activity, which is exactly why many e-retailers utilize dynamic pricing.
Paribus has positioned itself as the advocate of the individual consumer, serving as the champion of the "little guy" by taking back from large corporations. It uses the same approach as those retailers whose software automatically generates price changes. Instead of using data analysis to change prices, Paribus' software regularly checks for such fluctuations and automatically sends a refund request to the retailer when it discovers a change.
Investors are "buying in" as well: Paribus raised $2.1 million in seed capital in October of 2015. Now Paribus hopes to grow and generate more revenues by expanding its user base. One means to do this has been its promise to lower commission fees in the case of successful referrals from existing users: a move meant to enhance its user loyalty.
The Bottom Line
Paribus differentiates itself from other players that aim to save consumers money on their purchases. They do this by backtracking your purchases instead of looking to help you save on future buys. The ingenious part about Paribus is that it uses the very same advanced data structures and algorithms that retailers use to distort prices. Paribus presents itself as a champion of the average consumer who lacks the time and incentive to find (and follow through on) price-drop refunds.