Startup Wants To Give Online Customers Many Happy Returns

How cumbersome and annoying do you find the return process for items that you ordered online?

Well, a new startup is banking on you finding that process very annoying indeed, as its whole business model is based around making it simpler and faster for consumers to return products they purchased online at “return bars” it hopes will soon populate most major U.S. shopping malls.

Called Happy Returns, the Santa Monica, California-based startup is the vision of Mark Geller and David Sobie, two former HauteLook and Nordstrom Rack “sales gurus,” who discovered during their time working at both companies that online shoppers had a “particular enthusiasm” for wanting to return items they purchased online in person.

So, the pair founded Happy Returns in Sept. 2015 and are now in the process of trying to make the company’s “return bars” as ubiquitous in shopping malls as food courts and bathrooms.

“ECommerce has evolved … eCommerce returns have not,” the company says on its website. “The growth of online commerce continues at a rapid pace. The online shopping experience gets better every day. One area has lagged behind — returns. All online returns today are some version of ‘put in mail.’ Until now.”

Based on research they did after Nordstrom acquired HauteLook, Geller and Sobie discovered that three out of four shoppers wanted the option of being able to return an item they purchased online in person at a brick-and-mortar location (at Nordstrom Rack, this fact was responsible for driving 1 million new customers to brick-and-mortar stores in 2014 alone).

Happy Returns’ data also suggests that 78 percent of consumers are “more likely to shop with an online retailer that offers in-person returns.”

It’s a growing market, too, as returns amounted to $260 billion in U.S. sales lost in 2015, according to the National Retail Federation (NRF).

If you think about that staggering number more plainly, the NRF notes, that figure would place Happy Returns third on the list of Fortune 500 companies.

Geller and Sobie estimate that, if the average return amounts to $100, that’s 260 million customers that could be walking into shopping malls every year and utilizing Happy Returns’ bars to return items they purchased online. Add in that that figure would only be expected to grow if it were easier for customers to return items they purchased online in person.

And that’s Happy Returns’ intended market.

“There’s a whole large swath of shoppers that won’t buy things online because of the anticipated pain of returning them,” Geller said.

Happy Returns aims to make the online returns process a little less painful by eliminating the need to repackage the item, schlep it to the nearest post office or FedEx or UPS store, then wait weeks for the item to be received and processed by the retailer before the return is even initiated.

Instead, you can just take the item to the nearest Happy Returns return bar — the only one so far opened in the Santa Monica Place outdoor shopping mall in April — and once a Returnista verifies that the item is in good returnable condition (it does not need to be repacked or even come with a receipt), Happy Returns will then ask for the customer’s email address they used to purchase the item and initiate the return through the retailer on the back end.

Payment is returned to the consumer “at the discretion of the retailer,” either in the form of the original payment or store credit (so, you had better read those online return policy rules in advance if you plan on using this service), and the customer then leaves with an email from both Happy Returns and the retailer verifying the status of the return.

“We’re essentially just implementing their policy,” Geller said. “It’s actually the retailer that is doing the refund. What we’re doing is submitting the refund to them.”

Happy Returns was one of 10 startups recently announced as part of an accelerator by Westfield and advertising firm R/GA that provides the startups with $120,000 in funding in exchange for up to a 5 percent equity stake.

Westfield operates 32 gigantic shopping malls across the country, but due to the size and portable nature of the company’s return bars — Sobie said they typically follow a 10×12-foot footprint and can be set up anywhere inside a mall that offers enough temporary storage space until the returns can be picked up — the founders are hoping that their idea can be quickly scaled through shopping and strip malls across the country.

“We really feel like we can serve lots of different types of retailers with this model,” Sobie said. “If it’s good for your customer, it’s good for you.”