Like the brands and consumers it serves, Happy Returns is adapting to the “new normal.”
The Los Angeles-based, five-year-old company operates hundreds of “return bars” inside stores and malls, enabling consumers to return apparel, footwear, accessories and home goods from various brands all at once, at one location, and get instant refunds.
“We have worked with location partners to adapt our return process to the new normal of contactless retail experiences,” said David Sobie, cofounder of Happy Returns. “We got rid of the inspection layer.”
Rather than handing returned items to store associates for processing, shoppers now bag items from various retailers themselves and deposit the sealed bags into reusable totes that get shipped to Happy Return hubs for “reaggregation,” meaning products get sorted by brand and shipped back in bulk to the brand, a kind of reverse logistics. Happy Returns’ main carrier is FedEx. Customers still show the associates in the stores the products being returned but without deep scrutiny that slowed the process.
The updated process is streamlined by using QR codes to start returns, reducing the need for interaction between customers and store associates to call up orders and process returns. Consumers download the QR code at home from their purchases onto their mobile phone, which gets scanned into the Happy Returns system to initiate a refund or an exchange. Happy Returns online indicates the nearest return bar based on the consumer’s zip code. According to Sobie, Happy Returns are completed in under 60 seconds per item.
With the spread of COVID-19, Happy Returns temporarily shut down all of its return bars around the country in March. Two hundred have now reopened. “Pre-pandemic, we had 700 return bars operating. We should be at full strength by the end of July,” said Sobie.
With inspecting products being returned, “It used to involve actual quality inspection. Now it’s simple verification of the item – the right brand, style, size and color. Before, there were other inspection criteria,” revolving around the condition of the product. “The criteria has been relaxed in this [COVID-19] environment, Sobie said. For products that have been well worn or damaged, “the brands will send it back to you and fire you as a customer, but in most instances want to give the customers the money back.”
Happy Returns is a business that is gaining relevance with e-commerce growing exponentially, and the high degree of return of items bought online. Happy Returns eliminates many of the hassles of making returns, including the need to wrap, box and mail products back to stores or web sites, and print out labels. It also eliminates waiting for refunds. Right after a return is dropped, a shopper receives an e-mail indicating a credit to their original payment method.
However, the company, which isn’t profitable yet, needs to expand its footprint on the retail landscape with more return bars inside different stores. Happy Returns bars can be found at the concierge desks at 50 Simon malls expected to reopen soon; Bed, Bath & Beyond and its Cost Plus World Market division; Paper Source; Harmon Face Values, and several college and university bookstores, including UCLA and the University of Washington, among other locations. Retailers hope that if shoppers use Happy Returns in their stores, they are likely to shop the store as well. Happy Returns has been shifting from utilizing kiosks in common mall areas to situating return bars inside stores by the checkout and return counters. The returns are processed by store employees who are not on the Happy Returns payroll. The company is also exploring operating return bars in parking lots for drive-through service.
From the return bars, all items bulk-ship inside eco-friendly, reusable boxes, leveraging low carrier rates and aggregated shipping for economies of scale, to Happy Returns’ regional return hubs in Blandon, Pa., and Van Nuys, Calif., where they are sorted, dispositioned and processed to be shipped back to the brand.
The company must also extend the list of brands that participate in the system. About 80 brands use Happy Returns, including Everlane, Bed, Bath & Beyond and its Cost Plus Market division, Eloquii, Everlane, and Revolve. Brands get charged a monthly software charge as a service fee, and a per-item fee, ranging from $2 to $3.
“More shopping online means more returns. Customers want convenient, friction-free return experiences,” said Sobie. “We have to have more locations for return brands and more brands. We would love to get some department stores participating. Pre-COVID-19, Happy Returns was shipping hundreds of thousands of items every month.”