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The Battle Of That B*stard (Returns)

Partnerships could address the very real need to a) reduce the cost of returns and delivery for the retailers, b) drive traffic to locations receiving the returns and c) make life easier for the consumer.

PayPal announced an undisclosed investment in Happy Returns, a service that places Return Bars in malls and inside retailers such as multi-unit PaperSource and independent boutiques.  Happy Returns is trying to solve for some of retailer’s most pressing problems – consumer’s frustration at the returns process, the mounting costs of online orders and declining foot traffic.

PayPal already operates a returns service for consumers, covering up to $30 of return shipping costs for up to 12 eligible PayPal purchases worldwide. But consumers are resistant to paying for returns.

Happy Returns primarily addresses the retailer’s need to reduce the cost of the return of online orders, which Shopify estimates are returned at rates at least double those of in-store purchases.  The cost of returns is so great that the initial premise that online stores would be more profitable than brick-and-mortar ones has proven false.

Happy Returns generally works with direct-to-consumer and digitally native brands such as Untuckit and Rothy’s, using staffed locations to help the consumer at its Return Bars.  The service allows an online order to be returned without the consumer re-boxing the item and allows them to receive an instantaneous refund.  Happy Returns then aggregates, processes, and ships the returned items to a given retailer, distribution center, or even donates un-sellable goods.  In March the company rolled out a self-service kiosk that is placed at retailers and is used to exclusively accept only returns from purchases at the retailer’s own .com. The premise is to move returns from the check-out to a unique place, reducing customer wait time and freeing staff to serve customers.

Happy Returns is not the only company addressing the retailer’s return problem.

Kohl’s tested accepting Amazon returns for over a year and announced last week that the service will roll-out to all stores this summer.  Walgreens just partnered with Navar to establish return centers in its 8000 locations, working with retailers and brands such as Levi’s, Cole Haan, and Urban Outfitters. The Navar Concierge Service – which also partners with Nordstrom – allows consumers to pick-up packages, not just return them.  Navar differs slightly in that it still requires a consumer to box a return and print the labels, but the convenience of so many locations is significant. A common theme in the partnerships is a focus on the clothing and footwear categories.  Consumers regularly order the same style in multiple sizes to understand which fits them best, returning the cast-offs.

The partnerships could address the very real need to a) reduce the cost of returns and delivery for the retailers, b) drive traffic to locations receiving the returns and c) make life easier for the consumer.

 We don’t know the financials for the services;  Navar is privately held, Happy Returns is still a start-up, and Amazon is…. Amazon.  But the trend shows that these returns businesses will be part of a broader solution and thus may still not be profitable as standalones. 

But the consumer still expects convenience from their retailers and for their returns and this is one-way to deliver it.

This article first appeared in Forbes.

David Weiss

David is an accomplished retail executive bringing nearly 20 years of industry experience to each client project. David has worked for multi-billion dollar global companies, venture-funded start-ups and private-equity owned turnarounds. He is known for identifying opportunities, creating focus, and building cohesive business strategies.

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