5 startups helping retailers deal with a tsunami of post-holiday returns by making the process more cost-efficient and easier for customers to navigate

  • As e-commerce has picked up in the last several months, so has the rate of returns. 
  • A handful of startups have emerged to help retailers make returns cost-efficient, sustainable, and easier for customers. 
  • Get to know the startups leading innovation in the returns space.
  • Visit Business Insider's homepage for more stories.

The e-commerce sector notched astronomical growth in 2020 as the COVID-19 pandemic led many consumers to do more of their shopping online. 

But along with the rise in online shopping comes another kind of surge: returns. 

Retail experts are expecting returns to pick up in the coming weeks as shoppers get rid of unwanted holiday purchases. Optoro, a startup helping retailers to streamline their returns processes and reduce associated costs, is predicting that $115 billion of goods will be returned between Thanksgiving and the end of January. 

Read more: 'Buy online and pick up in store' has emerged as an important strategy for retailers looking to avoid last-mile delivery headaches amid the pandemic

A handful of startups have emerged to help retailers navigate a busy period in the most cost-efficient and sustainable way. Several of them are helping retailers to establish in-store processes for returns in order to encourage shoppers to avoid sending back packages via an already overflowing mail system. 

Here's who the startups are, what they do, and how much venture capital they have raised so far: 

Narvar works with retailers to improve transparency around their shipping and returns processes.

Founded in 2012, Narvar currently partners with more than 800 retailers, including Levi's, Home Depot, Sephora, and Patagonia.

It also recently partnered with Simon Property Group to create return drop-off centers at a select group of malls. Consumers can use the centers to drop off return packages for about two dozen participating brands, no packing label required. 

Narvar offers a suite of services aimed to streamline the returns process, though it doesn't do the shipping itself. 

Founder and CEO Amit Sharma says the company aims to show partners the value of doing returns well. 

"We have seen, when we do the analysis, that the repeat purchase goes up, if you offer a better [returns] experience," Sharma said in a recent interview with Business Insider.

Narvar has raised $64 million in venture funding from investors including Accel and Battery Ventures. 

Happy Returns works with brands like Untuckit, Everlane, Revolve, and Rothy's to streamline their returns.

Happy Returns offers partner retailers a number of solutions to make the most of returns, including encouraging shoppers to exchange goods rather than return them altogether and creating drop-off locations for returns to be made without using mail services. 

The company was founded by David Sobie and Mark Gellar, two HauteLook alumni who helped develop the capability for shoppers to return HauteLook orders to Nordstrom Rack stores, after the flash-sale site was acquired by the department store. 

The company now has more than 700 Return Bars where shoppers can make a return without needing a box or label. It also sets up returns kiosks inside retailers' stores, in an area away from where shoppers' make their purchases. 

To help shoppers making returns by mail, Happy Returns offers retailers the ability to efficiently route packages to its regional hubs. 

Happy Returns has raised $25 million in venture capital from investors including Upfront Ventures and PayPal Ventures. 

Its software can also be directly integrated with Shopify. 

Optoro helps retailers like Staples, Best Buy, Ikea, Target, and Bed Bath & Beyond manage their returns sustainably.

Optoro aims to reduce costs associated with returns by steamlining processes and minimizing shipping. 

Optoro allows retail clients to offer shoppers a branded returns portal, instant credit, and contactless drop-offs in-store. 

In October, it announced it would be bringing Express Returns service to more than 1,000 Staples stores across the country. The Staples stores will be able to accept returns from any retailer that currently uses Optoro's platform. Similar to the services offered by Narvar and Happy Returns, Optoro's Express Returns uses a QR code system to process returns. 

Optoro also helps partner retailers to sell returned goods, both on their own websites and on marketplaces like eBay and Amazon, so that excess inventory does not go to waste. 

Optoro has raised more than $244 million in funding from investors including Ikea, UPS Ventures, and Revolution Growth. 

Returnly gives shopping credits back to shoppers even before their returned items are received.

Returnly aims to fully automate the returns process for partner retailers. It extends a refund to customers even before the return is complete, and it automatically suggests a replacement item at the end of the process.

The fintech startup has also partnered with Optoro to develop systems that can reduce complexity and waste in returns. 

Returnly offers integrations with platforms like Zendesk, Shopify, Salesforce, and ShipHero as well as carriers like FedEx, UPS, DHL, and the US Postal Service.

Returnly has raised more than $30 million in venture funding from investors including TheVenture City Fund, SV Angel, and Max Levchin. 

ZigZag Global helps retailers in countries around the world consolidate returns.

Partnering with retailers like Boohoo and Topshop, ZigZag Global allows companies to track returns, make them paperless, and process them both in stores and in warehouses. 

ZigZag grades returned items based on the condition they are in so that they can quickly be put back into the supply chain if possible. It can also refurbish certain items. 

The company additionally offers retailers the ability to consolidate domestic and international returns into fewer packages so that they can save money on shipping. 

ZigZag Global has raised more than $20 million in funding from investors like Maersk Growth and Circularity Capital. 

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