E-tailer Verishop is uniquely confronting the returns challenge.
In the U.K. alone returns cost retailers more than 7 billion pounds a year, according to a May 2022 survey from shipping provider Pitney Bowes, and waste mounts in sync with the industry’s growth.
What’s the solution? For Verishop, getting customers to agree not to return a product in exchange for a promotional discount ahead of their purchase is a worthy investment. Unveiled Wednesday, Verishop disclosed a 25 percent stake in artificial intelligence-powered re-commerce solution ReKeepIt, which will facilitate the process for merchants on Verishop’s website.
The way ReKeepIt works is, customers get a choice of either paying full price for an eligible product (and having the ability to return as usual) or receiving a 5 percent or higher discount by opting out of a product return. For customers, it’s the choice of buying a $40 T-shirt or a $37 T-shirt — and the lowest price usually wins. Returns become wasteful in terms of carbon impact for shipping, restocking fees and more. Brands may lose out on a per-item basis, but the overall cost savings of offering ReKeepIt seems to pay off in case studies.
Imran Khan, cofounder and chief executive officer of Verishop, and a former Snap executive, told WWD that its return rates are on par with the industry, being about 30 percent or higher in apparel.
“Since Verishop’s 2019 launch, we’ve created multiple solutions for our brand partners. This acquisition is consistent with our vision of investing in tech to make shopping better,” he said. “Returns have long plagued the retail industry and are especially taxing on small and emerging designers. The aim of ReKeepIt is to reduce retail’s carbon footprint, while simultaneously setting these small brands up for success. And we’re always looking for ways to further empower customers in the decision-making process through tech, like with our patented livestream shopping capabilities and computer vision image retouching that we built.”
In all, Verishop carries more than 5,000 brands, or $1.8 billion in inventory, for sale. The shop carries a variety of merchants, be it direct-to-consumer names like Greats or Alohas for footwear, Indie Lee in skin care and designers like Anine Bing and Rachel Comey, on top of a host of lesser-known or emerging brands. The company’s latest funding round was a $40 million Series B in July 2022, led by Lion Capital.
ReKeepIt has only been at pilot stage with Dress the Population, a formalwear brand carried by Verishop. (Dress the Population and ReKeepIt are both founded by entrepreneur Adam Schoenbaum).
Schoenbaum mentioned the underlying sustainability (and financial) use case witnessed in the case study for ReKeepIt. “As the founder of an emerging brand, I know firsthand the many challenges faced, especially with returns. When we introduced ReKeepIt to Dress the Population customers, we saw a 50 percent increase in return on gross sales with a 40 percent reduction in dilution costs and 5 percent overall increase in average order value in just the first four months. It’s been a game changer, simultaneously strengthening customer loyalty, reducing customer issues, and putting control in the customers’ hands to commit to not return. It’s amazing that we can change so many things through ‘thoughtful shopping.'”
For the time being, only select d-to-c brands can trial ReKeepIt before a general rollout.