SIZZLING HOT: RETURNS STARTUPS LANDING BLOCKBUSTER DEALS

May 20, 2021

An entrepreneur pitching a reverse logistics startup 5 years ago may have raised doubts instead of venture capital funds. Last mile delivery has dominated logistics venture funding at $11.6 Billion since 2015, or 40% of the sector.

Fast forward six years, and Returnly and Happy Returns, leading tech startups in returns optimization platforms (ROP’s), have landed blockbuster acquisitions. Returnly was acquired by Affirm Holdings Inc. on April 21 for $300 Million cash and equity, and Happy Returns was acquired by PayPal on May 13 for an undisclosed amount.

With major back-to-back deals, why is investment growing in the reverse logistics sector, and why now instead of 6 – 12 months ago?

POST-PURCHASE EXPERIENCE

Focus has shifted from pre-purchase and last-mile delivery investments to post-purchase services that drive customer and retailer value through improved experience and greater efficiency. Now that e-commerce has taken hold in such a big way, retailers need end-to-end improvements to drive value in a challenging and competitive environment.

Post-purchase experiences, such as returns optimization, are landing investment from payment service providers after they invested in e-commerce purchasing, shopping carts, and fulfillment services. PayPal and Affirm straddle both pre-purchase (shopping cart tech) and post-purchase (payment options), and they are adding to their post-purchase value proposition with ROP services.

The most skeptical companies have been forced into e-commerce fulfillment, focusing primarily on getting pre-purchase fundamentals right. Now the market focus has shifted to returns optimization to complete the circular e-commerce experience.

ROP SERVICES

According to Optoro, a leading reverse logistics tech company, from their May 2021 Returns Report, there are four main strategies to drive value from reverse logistics.

  • Improve Customer Experience: Exceed customer expectations and increase loyalty with hassle-free online returns.
    • 89% of consumers who recently made a return reported checking the retailer’s return policy before making that purchase
  • Grow Top-Line Revenue: Increase returns value with faster re-stocking and access to additional sales channels.
    • Loyalist customers with highest return rates account for 39% of retailer revenue
  • Reduce Costs: Reduce returns costs with streamlined processing and automated decision-making.
    • Retailers lose out on potential recouped profit in secondary resell markets with inefficient returns models
  • Drive Sustainability: Decrease your environmental footprint by diverting waste from landfill.
    • 72% of consumers would be more likely to shop with a retailer who has an environmentally-friendly return process

Companies like Returnly and Happy Returns have built online platforms with comprehensive returns experiences that deliver on these main strategies. E-commerce post-pandemic acceleration and the “Amazon Effect” for same-day outbound delivery are conditioning consumer expectations for higher levels of choice and convenience. As corporations like Affirm and PayPal diversify their platforms and drive more revenue from servicing online retail demand, they look to improve post-purchase services and to complete their circular supply chain with comprehensive outbound and reverse logistics capabilities, vertically integrating platforms within their online ecosystem.

INVESTMENT OPPORTUNITY IN RETURNS

Timing is everything and investment today in the reverse logistics sector represents foresight to the next move of e-commerce fulfillment. Retailers are adding flexibility to their returns policies, adding more convenient returns options to their customers, and exploring partnerships to these ends.

Re-turnz First-Mile Logistics is the most convenient service for the consumer, eliminating the returns dropoff journey found in all current returns models. Re-turnz connects online shoppers with on-demand drivers who pick up and deliver return items within the hour – a contactless, seamless, and immediate returns experience from their doorstep. Our model drives consumer loyalty and thus grows retailer top-line revenue through loyalist customers.

Unlike last mile logistics, the first mile of reverse logistics outsource fulfillment to the consumer, creating a universal pain-point in the customer experience. In addition to being a stand-alone B2C turnkey solution, Re-turnz is integration-capable with retailer, parcel carrier, and 3PL/ROP platforms.

Leadership: Jose Tamez, CEO; T Brandon La Lanne, CTO; Jamie Myers, Director – Product Development 
Investment Opportunity: Jose.tamez@Re-turnz.com ; Brandon.lalanne@Re-turnz.com ; Jamie.myers@Re-turnz.com
Videos: https://www.youtube.com/channel/UCJlolxIqfTMg00uYy76rd8w

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