Generating revenue through targeted advertisements on its user interfaces, Paribus has revolutionized the concept of consumer saving by helping users get the best deal for their money after their purchases. This is in contrast to savings that are calculated before purchase, as is common among many pre-existing players in the space. Instead of acting as a search engine through which users can find the best prices or obtain coupons, Paribus backtracks all of their users’ purchases and helps them to secure rebates through participating company programs. The company has been free to use for consumers since 2016, when it was purchased by Capital One Financial Corp. (COF).

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. The core issue is that consumers rarely have the time, resources, and 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.

Since its founding, Paribus raised more than $2 million in funding before being acquired by Capital One for an undisclosed sum in 2016. At the time, Paribus revealed that the financial services company would absorb both the technology and the team at Paribus. Since that time, financial figures regarding Paribus' performance have been hard to come by for the general public.

Paribus' Business Model

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, in some cases, 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.

Paribus currently tracks price rebate offers at about 30 leading retailers, including companies like Target (TGT), Amazon (AMZN), and Walmart (WMT).

Key Takeaways

  • Paribus tracks receipts from online payments and completes refund applications for select stores on behalf of customers.
  • To date, Paribus has earned its users more than $29 million in rebates.
  • Paribus is free to use for consumers and generates revenue through advertisements.

Paribus' Rebate Business

Prior to the Capital One acquisition, Paribus would retain 25% of the amount of any rebate. Since 2016, though, Paribus has made its service entirely free for customers; they no longer retain any portion of rebates they secure and instead pass along 100% of returned funds to the user. In the case of totally free services, users are often skeptical how companies earn revenue. In the case of Paribus, it is through targeted advertisements displayed on its user interfaces. According to its privacy statement, Paribus is committed to securing its users data and does not sell user information for marketing purposes.

For those users still skeptical of Paribus' model, an alternative option some consumers use is through their credit-card providers. In some of these cases, providers 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.

Fast Fact

At the time of its acquisition by Capital One in 2016, Paribus had more than 700,000 users.

Future Plans

Paribus’ service is more important now than ever in retail sales. With the rise of digital marketing, price manipulations for online purchases are a seemingly everyday occurrence.

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. Ecommerce 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.

Champion of the People

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.

In the future, Paribus is likely to continue to focus on developing its technical capacity to track price changes and complete rebate applications on behalf of customers, while it simultaneously aims to continue growing its user base. Since the company moved to a 100% free model in 2016, it has shown no signs of further adjusting its approach.

Fast Fact

Paribus currently monitors roughly 30 retailers for rebate possibilities.

Key Challenges

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. However, there may be some challenges to this model in the future. While Paribus currently enjoys a favored position as a niche service provider, the tech sector is one of the most rapidly-changing fields. It is likely that new startups will challenge some aspect of Paribus' model at some point in the future.

A Calculated Risk

Paribus must also address changes to retailer policies and pricing algorithms as well, in order to best keep track of rebate possibilities for its users. A failure to do so could result in erosion of user trust and reputation.