A new business wants to reshape product returns

Discussion
Apr 07, 2016
George Anderson

It’s long been understood that a return policy directly affects how consumers view a retailer’s customer service. Companies with liberal return policies, such as Amazon.com, Costco, Nordstrom, L.L. Bean and Trader Joe’s, are often included in lists of the most customer-friendly retailers. Now, comes a third-party startup that is looking to change how consumers return unwanted purchases bought online.

Happy Returns, a company founded by two former executives at Hautelook, wants to offer consumers the option of returning items bought online to a physical location for an immediate refund rather than boxing up items and shipping them back. Research conducted by Happy Returns found that 78 percent of customers prefer to shop with a retailer that offers in-store returns.

“We are transforming returns from a painful chore to an efficient and delightful experience that encourages shoppers to increase the scope and frequency of their online purchases,” said David Sobie, co-founder and CEO of Happy Returns, in a statement.

Mr. Sobie and his co-founder, Mark Geller, believe that their new service will not only improve customer satisfaction, but will reduce costs for retailers by “aggregating products for shipment and eliminating customer support calls inquiring about the status of returns.”

Happy Returns is opening its first kiosk, known as a Return Bar, at the Santa Monica Place Mall in California. Mr. Sobie told Internet Retailer that the malls and stores where Happy Returns sets up shop will benefit from the increased traffic its kiosks generate. The company plans to open a network of Return Bars in the Los Angeles area this summer and expand nationally from there.

DISCUSSION QUESTIONS:
Do you see Happy Returns as a means for online retailers to improve customer satisfaction levels and reduce costs associated with returns? What do you see as the challenges and opportunities for retailers using a third-party vendor to manage product returns?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"If a retailer sells it then they should handle the returns. If Happy handles returns for them then the retailer needs to promote the Happy service and the typical online return (if it is a core method the retailers use)."
"If one were to draw the process flow diagram for all the things that have to happen to do this right, the very next question should be: Who can actually do this for a reasonable fee?"
"I don’t see this as having a big impact on the well-established online retailers like Amazon and L.L. Bean but for other pure-play online retailers as well as omnichannel retailers, this represents a real opportunity to outsource this service, bringing benefits to them and their customers."

Join the Discussion!

12 Comments on "A new business wants to reshape product returns"


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Tom Redd
Guest
4 years 6 months ago

If a retailer sells it then they should handle the returns. If Happy handles returns for them then the retailer needs to promote the Happy service and the typical online return (if it is a core method the retailers use). Some shoppers may be like “Wow, you can sell it online but cannot handle the return?” Retailers must offer both. I myself would not be “HAPPY” if I had to drive to a mall to return a product a bought online.

Great for holidays and retired people with time.

Dan Raftery
Guest
4 years 6 months ago

This business model seems unreal. Without any leverage with retailers or manufacturers, how will they make a profit after paying full retail for a return? I don’t get it.

Bob Amster
Guest
4 years 6 months ago
This concept is very attractive for the consumer. But then the consumer isn’t paying for any of the myriad processes that ensue when she shows up with one or more returns. If one were to draw the process flow diagram for all the things that have to happen to do this right, the very next question should be: Who can actually do this for a reasonable fee? I have more questions than answers but would love to work on this puzzle. (I like puzzles.) For example. Who issues the credit to the customer? The e-tailer, online? Without verifying the return first? Happy Returns? How will Happy Returns know how much the customer paid for the returned products? Tap into the e-tailers’ systems? A reprint of the electronic receipt? Whose money will Happy Returns use to credit the customer? If product will be returned to the e-tailer by Happy Returns, shouldn’t all identifying information be on the product so it can processed back into inventory? Will the fee the Happy Returns charges the e-tailer be sufficient… Read more »
Richard J. George, Ph.D.
Guest
4 years 6 months ago

Yes I do. As noted in the article, giving customers this desired option would improve customer satisfaction by taking the hassle out of returning products.

I don’t see this as having a big impact on the well-established online retailers like Amazon and L.L. Bean but for other pure-play online retailers as well as omnichannel retailers, this represents a real opportunity to outsource this service, bringing benefits to them and their customers.

Naomi K. Shapiro
Guest
Naomi K. Shapiro
4 years 6 months ago

I get the first part (about saving the hassles of packaging and shipping something to be returned) even though you have to take it to a physical place — which is easier for many (including me) than facing the daunting postal or delivery station.

This setup, however, breaks the contact between the retailer and the customer, and I don’t think that at all reinforces or enhances the role of the retailer.

And if cost reduction is the important factor, you’ve again lost the contact with the customer regarding whether they’re satisfied or not (and will do business again or not) with your company.

Peter Charness
Guest
4 years 6 months ago

Well the first goal of a retailer for a return is to satisfy the customer and hopefully have them turn that return into an exchange or another visit. Next even a liberal return retailer needs to verify that the product being returned does in fact have a purchase transaction. Expect Happy Returns to be filled by Happy Shoplifters turning theft into cash. As to Happy being a good surrogate for a legitimate customer being turned into a happy repeat buyer, doubtful.

Tina Lahti
Guest
Tina Lahti
4 years 6 months ago

It’s hard to contain the snark monster on this one. Someone actually funded this idea?

Lee Kent
Guest
4 years 6 months ago

I’m with Bob on this one. Not enough information. I just can’t see the model so I don’t see success.

For my 2 cents.

Martin Mehalchin
Guest
Martin Mehalchin
4 years 6 months ago

While the devil certainly may be in the details for Happy Returns, I think this is an idea with big potential.

Reverse logistics cost (for the retailer) and hassle (for the consumer) is one of the big remaining factors constraining eCommerce growth and profitability. If Happy Returns, or someone else, builds the efficient platform for consumer returns, it could unlock the next wave of eCommerce growth, particularly in the apparel category. Others are trying to reduce return rates by building online fitting/sizing tools but it’s proved super hard to make those work for a broad range of consumers and items. Reducing logistics costs may turn out to be an easier way to solve the problem.

Karen McNeely
Guest
4 years 6 months ago

Interesting concept, but it definitely faces many challenges for success. Their model is based on a certain amount of critical mass, and I’m skeptical that they will be able to achieve that in a short time frame.

Nordstrom Rack has the advantage of having self-sustaining infrastructure already in place. It doesn’t take much to add this function to the operation. For Happy Returns their entire revenue source is dependent on it, the revenue per transaction is less than the cost of shipping AND they will still need to cover some shipping cost.

Sorry to say, but I think they are doomed unless they add additional revenue sources.

Alan Cooper
Guest
Alan Cooper
4 years 6 months ago

More expensive consumer electronics is still a sticky area. Retailer leverage with the vendors/manufacturers are important considerations plus the continued efforts to curtail rentals and consumer involuntary physical negligence with products within the return periods. While it’s not consumer friendly to verbalize these type of issues, these are always topical discussions between corporate customer service and loss prevention departments when making policy. Even the giants use algorithms to monitor returns and curtail as necessary.

Matt Talbot
Guest
4 years 6 months ago

I see Happy Returns as a means for online retailers to improve customer satisfaction levels and reduce costs associated with returns. However, this thinking isn’t proprietary or new. Retailers including Target, Victoria’s Secret and Hautelook (Nordstrom) have been allowing customers to return online-purchased merchandise to their in-store locations for years.

While the business model is alluring for consumers looking to save time and money on shipping, there are so many business logistics that have to be executed seamlessly in order for this business model to work. Many companies have a 30 or 60-day period during which they’ll refund or offer in-store credit. What happens if an item is returned outside of that time frame? And items returned without a receipt, presumably gifts, might also pose an issue.

While it does seem like a good model for retailers without brick and mortars, the sustainability of the business seems unlikely.

wpDiscuz
Braintrust
"If a retailer sells it then they should handle the returns. If Happy handles returns for them then the retailer needs to promote the Happy service and the typical online return (if it is a core method the retailers use)."
"If one were to draw the process flow diagram for all the things that have to happen to do this right, the very next question should be: Who can actually do this for a reasonable fee?"
"I don’t see this as having a big impact on the well-established online retailers like Amazon and L.L. Bean but for other pure-play online retailers as well as omnichannel retailers, this represents a real opportunity to outsource this service, bringing benefits to them and their customers."

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