In a twist on contemporary retail trends toward online channels, consumers still largely prefer to return in-store. This consumer preference can be a pain point question for digitally native merchants, especially since eCommerce return rates are categorically higher than their brick-and-mortar counterparts. One logistics technology startup is working to solve the problem of physical returns for digital retailers.
“The easiest way to describe what we do,” said David Sobie, CEO of Happy Returns, “is that we're the buy online, return to store option for retailers that don't have stores.”
Founded in 2016, HappyReturns is working to grow a nationwide network of Return Bars, located in shopping malls, where online shoppers from participating online retailers can return their products in person. Happy Returns currently has seven Return Bars operating in five major cities — Los Angeles, San Francisco, Chicago, Washington, D.C., and Houston.
The staff at the Return Bars — or “returnistas” — use an app that's integrated into the back end of participating online retailers, Sobie said. Using the email address the customer used at checkout, returnistas use the app to call up their order history. The app confirms if the item can be returned and guides staff through the particular process assigned by the retailer. If all's well, Happy Returns signals the retailer to refund the customer.
“We're not involved in the transaction,” Sobie said. “We're just signaling to the merchant of record that we have the return and that they can go ahead and refund the purchase.”
On the consumer end, Happy Returns gives shoppers the return method they prefer and enables faster refunds. Additionally, Sobie noted that Happy Returns drives highly qualified foot traffic into the physical retail environments that host the company's Return Bars. On the eRetailer's side, Happy Returns saves money on the cost of returns and customer support.
“You and I could live on the same block,” Sobie said, “and both be returning to the same retailer. They would pay for both of our packages to return to distribution separately. If we both return at a Return Bar, Happy Returns can ship the two items in the same box.”
Last week, the startup released the results of a six-month pilot program with online apparel marketplace Tradesy at Happy Returns' Santa Monica location. Within three months of launching the pilot program, nearly 50 percent of Tradesy’s customers within the five-mile trade area of the Return Bar chose the in-person option when returning items.
The Tradesy customers who used Happy Returns reported a high level of satisfaction, resulting in a Net Promoter Score (NPS) of 90 out of 100. Further, some 71 percent of respondents to a Tradesy survey said they were “more likely” or “much more likely” to shop with the online retailer if the website featured an in-person returns option via Happy Returns.
As a result of the pilot, Happy Returns and Tradesy have entered a long-term partnership, said Sobie. Happy Returns will offer in-person returns for Tradesy shoppers at all its Return Bar locations nationwide.
“We're thrilled,” Sobie said. “Of all the retailers, Tradesy is the one that has the most data, has had the closest look at what we're doing, and they're now expanding to a longer-term relationship with us.”
In 2017, Sobie said Happy Returns is working to grow the national footprint of its Return Bars. The current plans, which are being finalized, call for new Return Bars in Dallas, New York City, Atlanta and Boston.
Happy Returns will also be growing in its existing markets. The company is looking to expand the number of Return Bars in Los Angeles from two to six or seven in 2017. Along with new locations, Happy Returns will reveal two new major retail clients in an upcoming announcement.
The startup is also looking to broaden the services they provide to retailers in 2017. Happy Returns is currently investigating its retail liquidation.
“In simple terms,” Sobie said, “there are many returns that retailers don't really want back — low-value items, seasonal goods. We believe that Happy Returns can be a partner to help them implement if and when they would rather turn a returned item into cash.”