This Reverse Logistics Startup Wants to Make Returns Less Stressful [Q&A Interview]

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E-commerce will account for an estimated 12.4% of total retail sales across the U.S. this year, 30% of which will be returned by buyers. These returns are plaguing consumers and retailers alike; return deliveries are estimated to cost the industry $550 billion this year.

Depending on the brand, reverse logistics could be costing consumers. Companies like Amazon generally charge their customers for returns, taking the sum cost out of the refund they'll receive for the product. Even with costs aside, returning your online order can be frustrating and time-consuming. Often you'll still have to pay for packaging, put together a shipping label, and drop off the package at your local post office or UPS store, and even still, you won't get your money back for 7-10 days. 

A new startup promises to ease this stressful return process for both retailers and consumers through their own third-party service. According to their site, Happy Returns promises to retain revenue, reduce costs, give shoppers options, and make your supply chain more sustainable. Happy Returns works with retailers like Everlane, Revolve, and Rothy's, companies associated with responsible sourcing and sustainability initiatives. 

Thomas Insights spoke to COO and co-founder Mark Geller about how his service works and how Happy Returns is revolutionizing reverse logistics in a world of evergrowing e-commerce transactions. 

Thomas Insights: How did you get into the retail industry, and what prompted you to start Happy Returns?

Mark Geller: "In 2010, I joined HauteLook, which was an early flash sale startup based in Los Angeles, as their head of mobile product development. That was my introduction to working with online retail. I enjoyed the challenge of using software to create shopping experiences that were incredibly easy, simple, and fun, and our team enjoyed a lot of success, as sales through our mobile apps increased from zero to more than $300 million per year in four years.

After HauteLook was acquired by Nordstrom in 2011, we wanted to enable HauteLook’s online shoppers to enjoy the benefits of the Nordstrom store network as well as Nordstrom’s famous customer service. One way to do that was to enable HauteLook shoppers the option to take returns to Nordstrom Rack physical stores rather than returning them by mail. This program was incredibly popular with shoppers and also beneficial for driving store visits.

One day over lunch with my co-founder, David Sobie, we realized we could create a third-party network of return locations to offer these same benefits to retailers with limited store networks and their shoppers, and we were excited to do that. Later on, we saw we could enhance that experience by offering the same kind of simple and easy process for starting returns and exchanges online as well."

TI: What does Happy Returns provide that's not currently offered in the standard return process?

MG: "Most online retailers today offer their customers a return process that is some version of “put it in the mail” — the customer must box or bag the item, print a label, tape the package together, visit a post office or carrier, wait 7-10 days or longer for the item to ship, and possibly pay a fee for the return. 

We know from experience processing millions of returns that customers really want a process that’s simple, sustainable, fast, and free. With Happy Returns, the customer hands the items to a human being, with no box, label, printing, or packing tape, and has the item approved immediately with a refund or exchange initiated in real-time. 

Even better, because Happy Returns aggregates items for shipment from our Return Bars back to the retailer’s warehouse using reusable totes at every step of the process, returns completed with Happy Returns are cardboard-free and much more sustainable than with any other method.

In the first year of partnering with Happy Returns, our customers enjoy an average of 40% cost reduction and 40% program adoption. Most also see a substantive boost in their exchange rate—often above 30%. We’re pretty proud of those metrics."

TI: How does your service benefit retailers? 

MG: "We provide two main types of service: A best-in-class software platform, and a network of efficient reverse logistics. Our returns software offers critical functionality that other providers lack: A fully-branded, customizable online flow suggests one-click exchanges based on the return reason provided. That’s huge when you consider over half (52%) of returns are made because of a size or color issue.

Happy Returns’ reverse logistics solutions upgrade shoppers’ experience with free, box-less walk-up returns and exchanges, immediate provisional refunds, and eco-friendly packaging — in-person, in-store, and at affordable rates by mail. Our solutions are the lowest-cost way to provide free returns.

Our platform seamlessly integrates with inventory management systems, and our comprehensive pick up and reverse logistics offer high-quality, consistent pass-through or processing. We actually touch the stuff, and our 95 net promoter score shows we’re really good at it.

Ultimately, because Happy Returns is immersed in every aspect of reverse logistics, we are able to streamline and optimize the entire process—which allows retailers to focus their time and resources on growing their sales and profitability." 

TI: How did Happy Returns use sustainability to drive its operations? 

MG: "My cofounder, David, and I both have families and we care a great deal about making the fundamental infrastructure of e-commerce more sustainable. When you consider that there are more than a billion online purchases every year in the U.S. alone and that as many as 30% or more of those items ultimately get returned, reducing the impact of that process is a huge challenge, as well as an opportunity.

We have several major initiatives at Happy Returns to make our process more sustainable and encourage adoption of more eco-friendly practices throughout the industry. For example, last year we completed the industry’s first end-to-end, cardboard-free return. Next quarter, we will become the first company using 100% reusable totes throughout our first-mile drop-off network. And we continue to work with our retail partners and their third-party logistics providers to promote the use of reusable totes for shipments to and from warehouses."

TI: What opportunities does the future hold for Happy Returns?

MG: In the next year, we want to continue helping retailers become aware of the huge near-term opportunity not only to cut costs and increase profitability but also to increase customer passion for their brands and honor their own commitments to sustainability — all by improving returns. In other words, we want to help retailers understand that when they are considering levers they can use to drive their businesses forward in 2020, “improving returns” should be at or near the top of that list.

Beyond that, we want to continue to earn our reputation as a retailer’s best “partner for life” for all aspects of returns. Leading retailers have inspiring visions for their companies extending decades into the future, we want to be the partner they know they can rely to solve this challenging area of their business so they can focus on what they do best — build and grow great brands.

Image Credit: Provided by Happy Returns