How Optoro Takes The Sting Out of Returns

Retail returns are literally good for no one. A return isn’t good for the consumer — as it means that for one reason or another, they did not get what they wanted. Easy returns mitigate that problem — and hopefully get the customer closer to the desired good — but the fact there is a return indicates that a customer has been let down in some way.

Returns are bad for retailers, and the frequency of returns is pretty high. Ten percent or more of the goods which retailers thought they sold in a physical store actually didn’t sell — and that represents about 3.5 billion items of almost, but not quite, sold items per year.

And that problem, according to The Wall Street Journal, is much more pronounced for online retailers. Some estimates put online returns in the range of 30-45 percent.

All of those goods flowing backwards across the marketplace does the economy no great favors either since that unwanted inventory clocks out to about $500 million in under-used value. Some of that value is recaptured - the current system sees brands and retailers letting unwanted inventory build up before selling it off to liquidators, who then broker the material to dollar stores and other similar discount retailers.

Much of it — by most estimates, the majority of it — goes into landfills.

And, according to the reverse logistics specialists at Optoro, this trend also results in a completely unnecessary waste of goods.

“Our solution brings cutting-edge technology to a truly antiquated industry,” an Optoro spokesperson told PYMNTS in an email. “What’s especially powerful is our win-win-win proposition: better value for our clients, amazing deals for consumers, and a healthier planet through more efficient use of existing resources.”

So how does that solution work?

The firm, based in Washington, D.C., uses proprietary analytics software to power a cloud-based reverse logistics platform that helps connect its retail partners' returned goods with potential buyers for those goods.


“We take the product from the source and connect it to all the people that want to buy,” Optoro CEO and co-founder Tobin Moore said in an interview. “The amount of time it takes to resell the item can be cut to several weeks or (sometimes) to a few hours.”

That big time abbreviation in resale time scale comes via two services offered by Optoro.

The first is the OptiTurn software, which automates the management and re-marketing of  "open box" returns and excess inventory on sites such as Amazon and eBay. The second is its eCommerce site, which offers automated dynamic pricing.

The entire process, Moore noted, is entirely transparent to the retailer, but not something that requires dedicated resources. Merchants have a reason to see this section of their business improve, but have not had the tools available to really see big improvements.

“I was impressed by the commitments retailers have made for the past few years in energy efficiency, disposal, other areas,” said Moore, who in 2008 founded eSpot, one of the first drop-off businesses inspired by eBay. “What retailers are doing with returns and excess inventory, however, were not in this picture.”

Streamlining the process reduces the potential for damage and minimizes the environmental impact of transporting things from one place to another, Moore noted.

It is an approach that has gotten some very high profile attention, and also drawn in some very major funding.

In late 2014, Optoro’s corporate Christmas present came in a few days early in the form of a $50 million in funding in a round led by Kleiner Perkins Caufield & Byers’ Green Growth Fund, with participation from returning investors Revolution Growth, Grotech Ventures and SWaN & Legend Venture Partners. Former Vice President Al Gore’s KPCB Green Growth Fund also reportedly kicked in $10 million.

“Optoro’s proven cloud platform captures that value for retailers and consumers by efficiently finding new homes — not landfills — for returned goods,” said KPCB partner John Doerr about his firm’s decision to invest in the firm.

That $50 million will go in a few directions, according to Moore. While the firm won’t specifically disclose its merchant partner list, it does report that it partners with roughly 40 manufacturers and retail companies to process returns, including “one of the biggest home and garden retailers and one of the biggest office retail chains,” and they are looking to aggressively expand that partnership circle.

They are also looking to better quantify the amount of waste it can reduce through its efforts at streamlining the resale process.

“We’re trying to come up with a better way to track it,” Moore noted.

And, of course, a better way to reduce the problem.

Reverse logistics is not a terribly exciting subject at first glance and so it is easily overlooked despite the fact that it manages to be a pain point for consumers, retailers, the economy and the planet. But Optoro isn’t overlooking it, and thinks it can build a business, and make the world a better place — simply by trying to address it better.



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