Americans love shopping online, but they want to return things in person

By Abha Bhattarai | Oct 13, 2017

Maria Butt's Long Island apartment is stacked with items she wishes she hadn't bought online but never quite got around to sending back: carpet pads, GoPro accessories, Alexander Wang sneakers and a case of lemon madeleines that "did NOT taste good."

But the thought of actually returning those misguided orders, she says, has always been daunting.

"There's something about the black hole of online returns that I just can't handle," the 27-year-old said. "To be honest, I cannot remember the last time I packed something up and shipped it back. I will literally do anything else: Give it to my mom, donate it, sell it on eBay."

But now, she says, she's found a solution: Happy Returns, which operates a kiosk in a mall five minutes from her apartment, where she can take back ill-fitting sweaters, sweatpants and other items she's bought from online-only retailers.

She's been there three times in the past three weeks, and she says the service has changed the way she thinks about shopping online.

"This has taken out the biggest barrier for online returns, which is the hassle of having to send something back," said Butt, a brand manager for Unilever. "Once I get to the mall, it literally takes me a minute to get a refund."

California start-up Happy Returns is among a growing number of companies trying to bridge the gap between online purchases and in-store returns. Amazon.com returns can now be dropped off at Kohl's or Whole Foods stores, where employees will pack and ship them free. (Jeffrey P. Bezos, the founder and chief executive of Amazon, also owns The Washington Post.) And Walmart last week announced that its revamped mobile app will make it possible for customers to return items in-store in about 30 seconds.

"We know returning an item and waiting for a refund, especially for a product purchased online, isn't always seamless," Daniel Eckert, a senior vice president at Walmart U.S., said in a statement. "We've completely transformed the process for our customers."

At Happy Returns, customers can bring back items from about a dozen retailers, including Everlane, Eloquii and Tradesy. The customers don't have to pay for return shipping, and they get an instant refund.

Even as Americans do more of their shopping online, about half of consumers say they prefer to make their returns in a store, according to data from Narvar, a firm that focuses on online customer service. (Among shoppers in their 20s, that figure was higher: 55 percent.) People may want to buy clothing, shoes, even groceries from the comfort of their homes, but when it comes to returning the ones they don't want, many would rather do it in person.

"We saw the numbers and were blown away," said Mark Geller, chief operating officer of Happy Returns, who co-founded the company with David Sobie. "We stopped and said, 'Whoa, what's going on here? These are people who buy online because they don't want to go to a store. And yet, they prefer to return things in person.' "

The reasons for that, he said, are multiple: Shoppers — who say they'd rather hand a return to a person and get a receipt than ship it into thin air — prefer to get their refund instantly, rather than waiting for the product to make it back to the seller's warehouse. As people do more of their shopping online, they tend to purchase items from a number of websites, each with its own return policies, shipping fees and couriers of choice, making it complicated to figure out what goes where and how.

"Plus, people are tired of the arts-and-crafts component of returns," said Sobie, the company's chief executive. "Finding a box, packing things properly, making sure everything is in order — no one views that as a fun errand."

Happy Returns was founded in late 2015 and has about 40 kiosks in 13 states, with plans to open 10 more by the end of the year. (In the Washington area, they are located in Tysons Corner Center, the Fashion Centre at Pentagon City and Fair Oaks Mall.)

This is how they work: Customers bring items to a Happy Returns location, where employees look up online purchases by email address and order number. The customer answers a few questions, and the employee processes the returns.

The items are then repackaged and relabeled to each retailer's specifications and sent back. Retailers typically pay Happy Returns a flat fee per item.

And there's an advantage of scale: "In a typical return, each customer mails in their own box," Geller said. "If you're returning 85 items, you've got 85 boxes. With Happy Returns, you can have 85 items in one box."

The company's founders met while working at fashion website HauteLook, where Sobie headed marketing operations and Geller oversaw mobile development. After Nordstrom acquired the company in 2011, it began allowing customers to return HauteLook items to Nordstrom Rack stores. The arrangement turned out to drive traffic to the company's locations — by 2014, returns of online purchases accounted for more than 1 million annual trips to Nordstrom Rack stores.

Sobie and Geller say that alerted them to an opportunity to benefit from the growing influx of returns, which has long been a major — and costly — problem for online retailers. They struggle with much higher return rates than their bricks-and-mortar counterparts: An estimated 25 to 30 percent of online purchases are sent back, about triple the rate for items bought in-store, according to a report by Worldwide Business Research. For clothing and shoes bought online, the return rate can be as high as 40 percent.

At Eloquii, a retailer that specializes in plus-size clothing for women, executives say returns have always been a particular challenge.

"The number one reason customers contact us — whether by phone, email or chat — is to inquire about the state of their refund," said Mariah Chase, the company's chief executive. "If we can chip away at that by making sure more customers are getting their refunds sooner, it's better for our customers and less burdensome on us."

The company began partnering with Happy Returns about a year ago. The number of customers using the third-party kiosks has risen tenfold since this spring, Chase said.

There have been unexpected benefits, too. A few months in, Eloquii executives noticed that a particular Happy Returns kiosk in a Chicago mall was drawing a steady stream of returns. Many of their customers, they realized, were already frequenting the Shops at North Bridge. A few months later, they opened a bricks-and-mortar store, Eloquii's second, there.

"We looked at the numbers and said, 'We know our customer is going there,' " Chase said. "She's walking in to make these returns, so obviously there's demand."

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Write to Abha Bhattarai at abha.bhattarai@washpost.com

Article was originally published here.