Eat. Sleep. Shop. Repeat. This is the motto for most shoppers, especially when you can buy almost everything at the tip of your fingers. Yet, many of us lose money due to price drops that happen every second. To save the day and our bank account, Karim Atiyeh co-founded Paribus.
The story begins when two friends, Karim Atiyeh and Eric Glyman, moved to New York for work. “Because we didn’t have time to go to physical stores but we had disposable income, everything from toothpaste to television was bought on Amazon.” Soon enough, they noticed that the prices of all the products they purchased kept changing. For example, Eric booked a flight to go on a ski trip. A week later, his friend bought the same trip on the same flight for a very low price.
The Aha Moment
Through an experiment in 2014, Karim was surprised to see that more than 80% of the items he had purchased during a certain month had lowered in prices. Via further research, he found that price adjustment was actually a very common phenomenon. “Then, prices were changing by 100’s and 1,000’s. Today, they’re changing by millions!” To put it in perspective, there are more price changes on Amazon than there are items listed.
“It seemed unfair that customers had to pay more. There are clear policies on these retail websites but it’s hard to find and work against. We wanted to stand for the customer using technology and data because at the time, no one was doing that.” Hence, Paribus officially launched in June 2015 at TechCrunch Disrupt.
“We wanted to be the customer’s voice.”
A former Harvard University graduate with a degree in Engineering and Computer Science, Karim initially decided to go down the consulting path. “It kept the door open for me to try different projects,” he says. Although he focused on more technical and quantitative side of things, he wasn’t content. “I wanted to do something more useful.”
And his plan worked! Today, Paribus with 1 million active users has become synonymous in the ecommerce world with retailers like Sephora, Macy’s, JCrew, etc. (Fun fact: The inventor of #hashtag, Chris Messina is a social ambassador for Paribus). Karim points out, “Users make decisions and buy things. They don’t’ want to think about how to optimize their pricing. But we can do that on their behalf via data collection. We’re giving them peace of mind although these aren’t huge savings! It’s small amounts that add up to big ones.” Interestingly, they also found that users who received more savings from a retailer converted into a loyal customer for that retailer.
The Name Game
Paribus comes from a Latin term, ceteris paribus, that is commonly used in economics. It translates to “holding all things equal or constant.” This is in line with the company’s vision to help users find the product they want to buy and not to worry about all the noise and variables.
How It Works
The Paribus brand is fairly simple. All a user has to do is sign up for Paribus and give the company access to their inbox. The Paribus Receipt Fetcher then identifies your purchases via receipts delivered to your mailbox. While you can keep doing what you’re best at (shop), Paribus will work in the background as your personal detective and track any price changes. If you’re lucky and the price of your product has indeed dropped, Paribus will file price adjustment claims on your behalf.
At the end of every month, you will automatically receive a summary of your purchases and refunds. Paribus gets 25% of the cut though there are ways to decrease this by inviting friends to sign up. In short, you’re literally getting paid for shopping!
Data Is King
When we asked Karim what were the basic details that the Paribus foundation was built upon, he explains, “There are many variables at play. Retailers like Amazon and others can be culprits because they have gathered so much data on their customers. They use this information to maximize their profits. Historical purchase behavior is also monitored. Basically, if you always purchase the first item that pops up in your search results, retailers can track it and show more expensive items during your next search. Then, there is the notion of high demand increases the price of that product. Timing is key as well – items are priced higher on the weekends vs. weekdays.”
On the flip side, Karim & co. learned that metrics really do matter during their time at Y Combinator. “Our metric was user acquisition every week. We had to meet that metric no matter what. If it didn’t happen organically, we had to ask friends to join or do a few Reddit posts. We had to become creative with the process to meet our numbers.” Other metrics that were important to them: conversion rate, sharing rate and clicks/visits to website from sharing.
“We want to do more with retailers and make the user’s shopping experience as seamless as possible. We want to build a platform that integrates a user’s input (receipt data), the discounts/coupons that are on the Internet, and given this input and what’s going on in the world, understand how Paribus can act on behalf of the customer.” Examples: emailing the retailer, automated purchasing, replacing credit cards, canceling subscriptions, negotiating cable bills and the list goes on.
RADICHE GUIDE to building a tech business:
- Don’t start with a business plan. Start with creating your prototype.
- Hire people that are like you, especially in their curiosity and intellectual caliber.
- Co-founders are important! One is ideal, more than 1 is too much. Responsibilities should be split 50/50 and make sure to keep each other honest.
- Test and break things fast.
- Build version 1 and release in 2 weeks to gather user reaction. Evolve based on their feedback.
Photo courtesy of Paribus.