Nordstrom Vets See Online Returns As A Cash Cow In Waiting

There are few happy with the current state of online orders. It’s an onerous step for consumers obsessed with convenience, and it can be an even more frustrating drain on retailers’ profit margins. However, a new startup from a pair of omnichannel retail veterans has a surprising solution for this seemingly impossible problem.

In an interview with Re/code, David Sobie and Mark Geller — entrepreneurs who came on board at Nordstrom when their business HauteLook was acquired — explained how their next venture, Happy Returns, had raised $1.9 million in seed funding off an original premise. Instead of having customers return items to the online stores they shopped at, why not a closer, more convenient physical location?

Sobie and Geller’s idea revolves around installing kiosks in brick-and-mortar stores, as well as opening full-fledged store fronts, to serve as intake centers for the surrounding population of online shoppers. When a consumer has an item they no longer want, they simply bring it to a Happy Returns location and will be presented with instant refunds when they do. The merchants in question are charged a fee on a per-item basis, but Sobie and Geller noted that, since Happy Returns will be returning products in consolidated shipments, the totals will be much less than paying for customers to return items individually.

By fixing what shoppers and sellers mutually agree is an imperfect process, Geller believes online merchants won’t have to worry about shrinking profit margins anymore.

“When you make it significantly easier to return items, people buy more,” Geller told Re/code.

As far as the $1.9 million goes, Happy Returns will be running a limited pilot program in a store front in a Santa Monica area mall. Customers who purchase items from apparel resale startup Tradesy will be able to instantly drop their unwanted purchases off and, ideally, go back home and buy more in the process.