After Amazon Split, FedEx Chases Bigger Cut Of Online’s Booming Returns Business

Oct 20, 2020, 06:00am EDT

Lauren Debter Forbes Staff

The delivery giant has partnered with upstart Happy Returns to accept box-free returns for participating retailers at 2,000 FedEx Office locations.

 DON & MELINDA CRAWFORD/EDUCATION IMAGES/UNIVERSAL IMAGES GROUP VIA GETTY IMAGES

FedEx is expanding its drop-off program for e-commerce returns ahead of a busy holiday season that many expect will produce a flood of returns in need of shipping.

The delivery giant has partnered with startup Happy Returns to accept items from 150 participating retailers — including Rothy’s, Everlane, Untuckit, Revolve, Steve Madden and Draper James — at 2,000 FedEx Office locations. The arrangement, which starts at the end of October, offers instant refunds at drop off without the need for a box or packaging. Customers simply present a QR code on their smartphone after initiating a return online.

“Amazon is training the American shopper that this is what returns are,” says Happy Returns cofounder and CEO David Sobie. “I think people are still delighted by this, but it is quickly becoming table stakes in the same way that free shipping became table stakes five years ago.”

Amazon and FedEx essentially ended their relationship last year when they let two shipping contracts expire, eliminating about $900 million of business for the logistics company, as Amazon is increasingly utilizing its own delivery network of distribution centers, vehicles and aircraft. Emphasizing one- or two-day deliveries, Amazon also allows customers to make returns without a box or a label at UPS, Kohl’s and Whole Foods.

The partnership will give Happy Returns 2,600 box-free drop-off points nationwide, Sobie says, the second-largest such return network behind Amazon, which he says has about 7,500 locations. In January, Staples made a similar move when it partnered with returns technology company Optoro to allow consumers to bring returns to more than 1,000 Staples stores starting in January.

“I think about friction a lot and there’s a lot of friction in the returns process,” says Ryan Kelly, vice president of global e-commerce marketing at FedEx. “Happy Returns has a really elegant, frictionless process.”

The partnership builds on a returns offering that FedEx introduced in 2018, which allowed large retailers to give their customers the option to bring returns into a FedEx location and print their label there. The company made the option available at Walgreens stores last year. It declined to disclose how many retailers participate in the program.

Sobie is aiming to cut returns costs by at least 10% by leveraging Happy Returns’ technology to aggregate items from multiple merchants into a single shipment, a potentially significant savings for retailers grappling with online return rates as high as 30%, triple the rate of in-store purchases.

The packages will be sent in reusable totes twice a week to two regional Happy Returns processing hubs, where they will be sorted and processed. Box-free returns reduce greenhouse gas emissions by 0.12 pounds per item returned, according to a 2018 environmental impact study by Yorke Engineering, commissioned by Happy Returns.

Happy Returns was founded in 2015 and gave shoppers the option to drop off returns without a box or label at designated locations at traditional retailers, shopping malls, campus bookstores and office buildings, many of which were closed during the pandemic. The FedEx partnership quadruples its presence and will enable the company to process one million returns a month.

Article was originally published here.