PayPal bids Happy Returns with strategic investment
By Annlee Ellingson | Aug 25, 2019
Happy Returns has a new pal — PayPal, that is.
The online payments giant has made a strategic investment in the provider of returns and logistics solutions for retailers and customers as part of an $11 million financing round.
Through the Full Stack Returns solution the company introduced six months ago, Happy Returns offers software, services and logistics to retailers, enabling their customers to return products in-person through a nationwide network of Return Bar locations, as well as through the retailers’ own stores or by carrier.
“Our mission is to make returns more delightful for consumers, more cost-effective for retailers and more sustainable for the planet,” said Happy Returns co-founder and CEO David Sobie in a statement. “We’re thrilled to work with PayPal to make the process of returning more seamless for shoppers and our service more broadly available to PayPal’s large network of merchants.”
PayPal (NASDAQ: PYPL) said in its first-quarter earnings on Wednesday that its merchant accounts now number 22 million.
Items purchased online are three to four times more likely to be returned than in-store purchases, Happy Returns said, and the traditional online return process of packaging items individually and shipping them via carrier is cumbersome, wasteful and expensive.
With in-person returns, Happy Returns aggregates items at the start of the process, resulting in returns that are immediate and hassle-free for shoppers, and more efficient and cost-effective for retailers.
“Happy Returns has reengineered the return process with the customer in mind and that brings greater cost savings and efficiencies to merchants,” added Robert Clarkson, vice president, North America at PayPal. “Working with Happy Returns will help us learn more about how returns can decrease the friction in shopping online and how to help merchants address this growing problem.”
Existing investors U.S. Venture Partners and Upfront Ventures also participated in the funding, which brings Happy Returns’ total financing to $25 million.
The investment comes on the heels of rapid growth for Happy Returns, whose network of in-person Return Bars is now in more than 350 locations in 63 metro areas through partnerships with national retail chains including Paper Source, Sur La Table and Cost Plus World Market. Its Full Stack Returns suite has been adopted by leading digitally native brands such as Rothy’s, Everlane and Parachute Home, and the volume of returns and exchanges processed by the company has grown 800 percent year over year.
To support this growth, Happy Returns has opened two regional Return Hub facilities in Blandon, Pennsylvania, and Van Nuys, California, for processing and aggregating returns.
Founded in 2015, the Santa Monica, California-based startup employs 55 people.
Sobie expanded on PayPal’s strategic investment in his company via email, including how the deal came about, what PayPal brings to the table and what Happy Returns’ next moves are.
How did PayPal’s strategic investment in Happy Returns come about?
We were introduced to the team from PayPal Ventures last summer and spent the past year forging a strong relationship based on a common commitment to removing friction from e-commerce. PayPal uniquely understands the challenge of returns in e-commerce — for shoppers who dread the hassle and wait of returns by mail and for merchants who face escalating costs to fund shopper expectations of free and easy returns — and we quickly came to understand we have a common view of the problem and required solution.
In addition to new financing, what does PayPal bring to the table?
PayPal is an ideal partner for Happy Returns, given its history as a pioneer in payments and its expansive merchant network. This investment validates our approach to the market, what we call “Full Stack Returns.” Specifically, this is a set of software, services and logistics working together to make returns beautiful — for shoppers, retailers, partners and the planet.
What are Happy Returns’ expectations of the partnership?
As part of the financing, Happy Returns and PayPal intend to finalize a commercial agreement to work together on removing return friction from the merchant community. Stay tuned for more details on this — we certainly will make them available when appropriate.
How else will Happy Returns expand this year?
Happy Returns plans to continue our rapid expansion on multiple fronts. This includes:
Significantly expanding our Return Bar network for in-person (no box, no label) returns from our existing 350 locations in 63 metro areas;
Introducing new software and physical service offerings for retailers, including the self-service returns kiosk we introduced in March for omni-channel retailers; [and]
Increasing our capabilities to support international shoppers, as more and more of our retailer base expands overseas.
Write to Annlee Ellingson at annleeellingson@bizjournals.com
Article was originally published here.