When men’s apparel retailer Outerknown began researching a returns processor, the plan was to provide physical return locations for online shoppers. By the time the program rolled out in July, Outerknown had agreed to use the full range of services offered by return management vendor Happy Returns.

Those services include store-based returns through any of Happy Returns’ 275 physical locations—called Return Bars—in nearly 60 metropolitan locations across the country, about 145 of which are based in stationery retail chain Paper Source’s stores. The remainder are in mall guest services areas, shipping supplies stores and individual retailers. Return Bars were part of Outerknown’s original plan, says Travis Heard, chief financial officer at Outerknown.

“We are a digitally native menswear brand and the majority of our revenue comes from e-commerce,” Heard says. “As with other companies like ours, returns is a key piece of running a business for customer service and retail success.” Online-only Outerknown also sells through more than 90 retailers in the U.S., including Sun Diego Board shops in California and Net-a-Porter.com, which is No. 76 in the Internet Retailer Top 1000.

Fewer vendors

Initial discussions with Happy Returns focused on Return Bars, but then Heard learned more about the vendor’s “Full Stack Returns” program, and he became more interested for one basic reason: “I prefer fewer vendors,” he says. The combination of physical return locations, online returns processing and technology that enables analytics swung the deal.

Outerknown expected to reap some savings by outsourcing most of the return process to Happy Returns and to smooth out the steps for customers. But the payoff came from what the retailer terms “saving the sale,” Heard says. More than 20% of sales since the return system launched have come from exchanges, which previously could have been straight refunds unless the customer requested information about exchanges from the customer service department.

“Returns have always been a messy business and a big challenge in e-commerce,” Heard says. “An ability to exchange products through an e-commerce platform is unheard of,” without customer service stepping in, he says.

Plus, the Happy Returns software allows the retailer to exclude its clearance—final sale—from the returns portal that customers access via the website.

Happy Returns offers retailers multiple return options, including store-based and online returns; logistics in the form of providing carrier pickups and return packaging; and, as of today, software and returns by mail. Another new service targets online-only retailers that open pop-up or permanent physical stores.

Using the full range of Happy Returns’ services, Outerknown has already seen benefits, such as freeing up staff. Outerknown’s three-person customer service staff spends 60-70% less time on returns by Heard’s estimate, enabling them to handle such things as returns that fall outside the return time limit. More time also allows customer service agents to address other customer needs and questions, and make more sales, he adds.

Although, the retailer’s cost per return remains about the same as prior to Happy Returns, which is roughly $11-$15 per return. “There’s a moderate cost savings, but we’re freeing up customer service and saving sales,” Heard says.

Branded process

The software integrates with a retailer’s order management technology and can access inventory to drive the product exchange process. Because the functions are branded to each retailer, Outerknown.com customers don’t know Happy Returns is running in the background. The return technology also provides reporting and analytics of returns and exchanges in all channels—the retailer’s stores and Return Bars, by mail and online—in the form of a dashboard, says David Sobie, CEO at Happy Returns.

Happy Returns launched three years ago with an in-person return processing model. The vendor now offers software, services and logistics because “retailers want their customers to have options,” Sobie says. Happy Returns offers retailers a way to consolidate and ultimately reduce costs associated with product returns and meet rising customer expectations. “Consumers expect free returns along with shipping,” he adds.

The vendor’s technology is delivered in a software-as-a-service format and recommends exchanges if a retailer’s inventory shows other options, such as the same pair of jeans in a different size. In addition to integrating with a retailer’s order management and inventory software, Happy Returns technology integrates with its payments system in order to manage refunds or additional sales, Sobie says.

Happy Returns has a two-tier fee structure, one in the form of a monthly fee for access to all software, services and its network of Return Bars. The other option has per-unit fees for processing and shipping returns, Sobie says. He declined to disclose fees other than to note that they depend on the retailer’s size and the scope of services chosen.

Three distribution hubs

The vendor can manage the logistics of getting the returned products back to the retailer by aggregating multiple products in one of its three distribution hubs and then sending products in batches. The hubs are located in New York, Los Angeles and Blandon, Pennsylvania. For retailers that don’t want a product returned, Happy Returns can donate the goods or pass them along to a liquidator, Sobie says.

One example of a store-based return is Happy Returns client Eloquii, No. 816 in the Internet Retailer 2018 Top 1000. The plus-size apparel brand’s floor sales staff use iPads loaded with the vendor’s app to process returns of online purchases. Happy Returns then schedules a pickup by one of its carrier business partners, Sobie says.