Happy Returns has big plans for 2024, says CEO and co-founder David Sobie. The United Parcel Service (UPS) announced plans to acquire the reverse logistics company in October.
Happy Returns manages returns for online retailers through kiosks called Return Bars. Customers use Return Bars to send back purchases from online retailers. The vendor says it has more than 10,000 locations, many of which are through partnerships with retail chains Ulta, Petco and Staples. It works with 800 retailers and has grown revenue to 10 times 2020 levels, Happy Returns says.
Happy Returns charges retailers a monthly service fee for handling returns and a per-item fee that varies, depending on the processing work required. Retailers with return kiosks also benefit from the increased foot traffic, which can lead to browsing shoppers and potential sales.
Sobie told Digital Commerce 360 about how the acquisition is going so far, and what the vendor’s hopes are for 2024.
Sold by PayPal
PayPal’s sale of Happy Returns was unfairly painted in a negative light in some media portrayals, according to Sobie. It fits into a narrative he characterizes as “big software companies offloading their failed logistics investments,” which he claims is inaccurate in the case of Happy Returns. For comparison, Sobie points to Shopify selling logistics startup Deliverr in May and Affirm shutting down Returnly in July.
Happy Returns’ case is different, Sobie says. UPS paid $465 million for the company, a 75% increase from the $265 million PayPal paid in 2021. That growth shows Happy Returns is “certainly not a fire sale. It’s not that this is a failing business that we have to offload,” Sobie says, speaking from PayPal’s perspective.
The reverse logistics vendor grew substantially under PayPal, Sobie says. When PayPal purchased Happy Returns, it had one hub for processing returns on the east coast, and a smaller, half-size hub on the west coast, Sobie says, totaling about 45,000 square feet. Now, it has about 250,000 square feet in processing warehouses around the country to keep up with growing business.
“As we were looking at 2023 and planning our budget, every metric was through the roof. We wanted to keep investing to maintain that growth,” Sobie says. That’s when he and others within the company realized PayPal was likely not the best place for the future of Happy Returns, according to his account.
Why UPS makes sense for Happy Returns
Happy Returns considered a variety of options outside of PayPal, including a private equity investor and becoming an independent company once again, Sobie says.
“When you think about the two sides to our business, UPS stores fit really well as the anchor of the drop-off network. The other side is the merchants who use our services. Well, every merchant has a relationship with UPS,” Sobie explained.
Having an internal relationship with a major shipping carrier like UPS presents opportunities to cut costs and make operations more efficient. For example, Happy Returns is considering making changes on everything from how frequently packages are picked up from return bars, to what size boxes they accept and using reusable totes with UPS input, Sobie says.
The acquisition is beneficial for Happy Returns’ retail clients, too. Customers are giving positive feedback on the increased number of drop-off locations inside of UPS stores, says Ranu Coleman, head of marketing at children’s clothing retailer PatPat.
Since implementing Happy Returns in October, “it’s a money saver,” Coleman says. “The driver of this collaboration is really around customer retention — returns are a major part of our business, and Happy Returns makes the process easy for our customers.”
Happy Returns saved PatPat’s support team about 20 minutes per person per day in handling return requisitions and improved its Net Promoter Score from 40 to 85, she says.
Focuses going forward
Happy Returns is vying for more large, enterprise clients in 2024, Sobie says. That’s the reverse logistics vendor’s main goal going forward. Gaining those clients is possible in part thanks to UPS. The delivery company already has relationships with those clients and will lend the company credibility, he says.
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