Turning the tables on big consumerism: How to provide justice as a service
In an extended edition of our Featured Innovators series, we caught up with Marc Atiyeh, Head of Growth at Paribus - an automated plugin which connects to users’ email, scans their online purchase receipts and files price adjustment claims on their behalf.
The innovation featured in our 5 Trends for 2016 Global Briefing as part of our BENEFICIAL INTELLIGENCE trend – detailing how rising numbers of consumers expect brands to use machine learning and artificial intelligence to develop truly smart products and services.
What was the inspiration behind Paribus?
We started by making a simple observation: stores are collecting more and more data with each passing day to drive up what consumers pay. Online retailers algorithmically alter the information we see, influence our perceptions, and push us to pay more for less. We wanted to turn the tables and empower consumers with advanced algorithms too. And we wanted to make the shopping experience hassle-free by eliminating the need to price compare.
There are more than 100 million price changes every day across different retailers, and $15 billion per year in unclaimed price match refunds in the US alone, so our goal was really to help consumers redress that. Indeed, now we like to think of ourselves as offering "justice as a service”.
What were the challenges you faced establishing the innovation within the market? Was it difficult to draw consumers’ attention to the issue? And what kind of results have you seen over the past year or so?
Our first mission was to educate people about those best price policies that most retailers have in place. Most of our early users had actually no idea that those policies even existed and that they are entitled to the difference back should the price of a product they previously purchases drop.
The second challenge was around privacy/security. We had some concerns around users granting access to their inboxes.
One of our key goals is to make a service that's so easy to use that you never have to think about it (it will work in the background to save you money on all your purchases).
We find that the inbox is best.
Regarding security, to prevent unauthorized access, Paribus employs multi-level security mechanisms including dedicated firewalls, VPN services, intrusion prevention systems and stringent access controls on all information. Data is always transmitted securely via 256 bit SSL (bank-grade encryption). And sensitive information (passwords) are stored using AES-256 encryption — the world’s leading security standard. Paribus does not live in your inbox -- mail always remains under the supervision of your inbox provider (Google, Microsoft), and only messages that appear to be transactional related are ever pulled by Paribus. We also regularly work with outside security professionals to ensure highest standards.
When we started, we really didn’t know how this was going to pan out with the stores and how they’d perceive us. But it turns out that if you treat the consumer well, it appears that they come back and shop more and spend more.
Here’s what Nordstrom had to say about treating well consumers:
“Nordstrom (JWN) even sees price-matching as a necessity and not simply a strategic priority, the company’s co-president and director Erik Nordstrom said on that company’s earnings call.
“We do not look to price matching or price promotion in any way as being a big strategic lever and a way of driving our top line. We look at price matching as a customer respect and a customer trust issue: that when a customer comes to us, they know that they’re being treated fairly,” he said. “And we think the clearest way of doing that and what customers expect is not to pay more for a specific item when they’re shopping with us.””
So, a couple of observations we saw:
If you, the consumer, get a price protection claim on something that you’ve bought, you are much less likely to return it. And we know that it’s a huge hassle for companies - Nordstrom, for example, had a 30% return rate in 2014. If you tell them that Paribus can reduce your return rate from 30% to 10%, they’ll say “we’ll take that!”. Right now, if you look at the 44 Paribus users that bought one of their products, the return rate is below 3%. We can absolutely make a point that price protection reduces returns.
Something else that we realised is that for a person, or for a cohort of users, that saved or got a price protection plan from a specific store, there was a 200% increase in spending with that particular retailer. So the consumers are much more likely to go back there because they know they are going to be treated well, they felt that they didn’t overspend, they felt that the store wasn’t there just to rip them off - it makes them feel comfortable that the stores themselves are upholding their end of the bargain; they price their goods fairly and, as a buyer you are naturally appreciative of companies that honor these things.
In terms of concrete savings, we’ve saved consumers over $1m over the last 12 months.
We saw that, as well as the 200% increase in spending, for a store that honoured their price protection through Paribus we saw the same increase in NPS (Net Promoter Score - essentially how likely the buyer is to refer or recommend the specific store based on the service they offer) and a 300% increase in the frequency within which they were shopping. We carried out this research using an extremely random sample of our users - so we’re confident that those results are reflective of where we are at the moment.
What’s next for Paribus? Where do you see yourselves heading?
Ultimately, what we’re trying to do is become the consumer’s ‘agent’ in a way - we’re here to ensure that they take advantage of all of those policies that are put in place by retailers and others. We’re one of the very few companies that actually use your data to save you money (as opposed to selling your data). Even if the business or the retailer is making it hard for consumers, we want to be the ones helping out the Average Joe who doesn’t have the time to look into all of this.
What about trends in a broader sense? Are there any that you’ve spotted recently that have resonated with you?
One thing that I’ve noticed is the fact that stores are becoming smarter and smarter, in terms of how they’re setting those prices. In this context, I’m thankful for what Paribus is doing - at the pace we are going, we can make a real impact for consumers. It’s important that technology is being built that works for the buyer and it’s up to companies like us to make sure that this trend of smart people and smart robots are not just spending their time helping to maximise the profits for big retailers like Amazon and Bloomingdales - that’s what we’re trying to do.
However, it’s important to remember that we’re absolutely not going against those stores. As I’ve mentioned, our research shows that we should be allied with them instead of them looking at us like an organization that is attacking their margins. If anything, we’re increasing their top-of-the-funnel revenue.
Finally, before you go: have you got a favourite new business or idea? It could be anything - start-up, app, service…
There are so many people doing cool stuff! One start-up that are doing something that’s very disruptive to their industry is Nootrobox. If you aren’t familiar with nootropics, it’s essentially ‘smart drugs’ that would serve as an alternative to chemically-heavy prescription drugs currently available in the market.
This company is based in San Francisco and is backed by some of Silicon Valley’s smartest investors; they have three or four major products, all of them super-organic, and they’ve gained a lot of press attention in the US recently - from Bloomberg to Showtime TV for their work. They’re going after these huge pharmaceutical companies that get people hooked on amphetamines and offering an alternative to that - even down to natural replacements for caffeine. Certainly one to keep an eye on.
Marc Atiyeh is Director of Growth at Paribus, focusing on the company's growth efforts from operations, partnerships, and marketing.BLOG HOME