E-commerce has created a world of incredible, even disturbing convenience. The average American living in a major city can now outsource nearly every chore imaginable, while having everything she would ever need delivered to her home within a couple of hours. But along with the convenience comes a growing suspicion we may be overpaying. Prices on the web change constantly. On one day in 2013, Internet Retailer magazine found that Amazon changed prices on 40 million products. And price changes aren’t only about keeping up (or down) with the competition — they’re also increasingly personalized, with a mind toward pushing you toward the highest possible price you will pay.
A certain amount of price discrimination is expected, and is sometimes even seen as benevolent. Few strenuously object to a senior citizen getting a discount at the movies. But that kind of discrimination is transparent. There are other, more insidious forms of differential pricing, and they’re often invisible. Websites have been caught changing the prices you see for all sorts of factors, such as whether you’ve logged in, which browser you’re using, and what purchases you have made before. In other cases, retailers modify their search results to push you toward higher-priced items.
Retailers modify searches to push you toward higher-priced items
Most retailers allow you to request a partial refund in the event that the price of an item you purchased drops within 14 days or so. But the difference can be difficult to collect. Even if you find out that the purchase price dropped, each site has different policies and procedures for getting your money back. Some ask you to fill out an online form. Others make you send them email. And you have to be persistent: not every company grants your request the first time around. If you’re only going to save a few dollars anyway, most won’t bother.
But to ask the most popular question in Silicon Valley — what if someone else just did it for you? That’s the idea behind Paribus, a Y Combinator startup launching its iOS app today. The service, which launched on the web earlier this year, connects to the email address you use for shopping online. When Paribus finds a receipt, it monitors the price. And if the price drops, Paribus negotiates for a refund — while keeping a cut, typically 25 percent, for itself. (You can temporarily lower the fee to 0, in 5 percent increments, for every friend you refer Paribus.) Its negotiations are automated: it sends emails on your behalf, fills out online forms, and varies its messages to make them sound more human.
The app is like a concentrated version of the website with a useful new feature: a push notification whenever Paribus gets you your money back. Open it up and it will show you how much money you’ve spent on e-commerce, divided by retailer. A second tab shows you a feed of your recent purchases. And there are standard tabs to show you your profile, edit your payment information and shopping accounts, and share the app with a friend.
"There's so much great technology on the other side."
The result is a service that helps protect you from price discrimination, while also encouraging companies to be more transparent in their pricing. "There’s so much great technology on the other side," says Eric Glyman, who co-founded the company with his Harvard classmate, Karim Atiyeh. "We want to build technology and a business that only succeeds if we’re building value for consumers."
It’s this technology-assisted score-settling that appeals to me most about what Paribus is doing. E-commerce companies essentially have unlimited resources to manipulate you into higher prices. Aside from the odd credit card that offers some purchase protection, consumers are essentially on their own. Glyman says Paribus’ incentives are aligned with shoppers: it only makes money if you do. (It also won’t sell your purchase information to marketing companies or anyone else.)
Still, there are some important caveats with Paribus. Most worrisome is the idea that they have access to your email, and send emails on your behalf. The founders say it’s all automated, but still, it will give some the willies. The company recommends signing up for Paribus with a new email address, and using that email address exclusively for shopping.
Eric Glyman (left) and Karim Atiyeh.
There’s also the question of how major retailers will respond to the service. (I was most interested in what Amazon would have to say about Paribus; it did not respond to a request for comment.) The founders say it’s in the interest of companies to work with them, because customers who trust they are getting the best price will shop at a store more often. At the same time, Paribus acts as if retailers will be less likely to offer refunds if it were ever discovered to be a bot: it is designed to make all of its communications seem as if they were written by the customer. If it were to reach a significant scale, the service would eat into what are typically razor-thin retail margins.
Technology-assisted score settling
At the very least, price monitoring will likely continue to be a cat-and-mouse game. Retailers already go to great lengths to avoid letting competitors scrape pricing information from their websites; this will only evolve. And I wouldn’t be surprised if some e-commerce outlets tried to block Paribus outright.
But that would only prove its point: that for all their claims of low, low prices, e-commerce companies are often working invisibly to push them upward. Until now, the technological advantage has belonged to them almost entirely. Paribus is a welcome effort to begin leveling the playing field.