In-store returns for online-only merchants are coming to more Happy Returns locations thanks to a new funding round led by PayPal Ventures.

Return management vendor Happy Returns recently raised $11 million in a round led by PayPal Ventures, the payment provider’s venture capital arm. Upfront Ventures and U.S. Venture Partners also participated in the round, but exact investments weren’t disclosed. The vendor plans to use the new funds to hire more sales staff and add capabilities to its software.

Happy Returns is a returns service that online retailers integrate onto their ecommerce site, so shoppers can return products to a network of partnering retail chains. The return vendor now has more than 350 “Return Bars” around the country, including at mall kiosks, college bookstores and retail chains. That includes all 145 Paper Source locations, plus a pilot at 80 Sur La Table locations (No. 281 in the Internet Retailer 2019 Top 1000) and a test at more than a dozen Cost Plus World Market stores. Online retailers that offer the Happy Returns network include retailers that do most of their business online like Everlane (No 294), Untuckit (No. 338) and Rothy’s.

Happy Returns trains store employees to inspect items to ensure return eligibility before packaging them up to be shipped to regional Happy Returns hubs. It then sorts returns, sending damaged goods that can’t be resold to recycling centers, out-of-season items to liquidators and resellable items back to a retailer’s distribution center to be offered to the next customer.

The expansion to all Paper Source stores, which happened in August 2018, is successful, according to Happy Returns CEO and co-founder David Sobie. Shoppers who make a return via Happy Returns while at Paper Source are more likely to make a purchase while at the store than the average store browser, Sobie says without revealing specifics.


In its pilots with other retail chains, Sobie says the vendor is training store associates to accept returns in a way that matches how the retailer would do it themselves. It’s also tracking conversion rates of consumers who return items and surveying shoppers to make sure both the merchant and the retail chain are benefiting from the process.

When considering a new retailer to partner with, Happy Returns looks for companies with overlapping shoppers, but who don’t necessarily compete, Sobie says. The stores are also places that shoppers may not visit regularly, so offering returns gives the retailer another way to attract shoppers who may make a purchase in-store instead of at an online competitor.

Happy Returns is also piloting returns at co-working spaces in a test to make returns available in the workplace.

“Many people get orders sent to their office already,”  Sobie says. “Why bother taking the item home when you can see if it fits at work and drop it off for a return on the way out if it doesn’t?”


He foresees office buildings offering the service as a perk to tenants as workplace amenities become a growing consideration in a tighter job market.

Happy Returns also offers software to assist retailers in processing returns via mail, and Sobie says it plans to use the funding to expand its software capabilities to provide a greater portion of the post-purchase messaging, including tracking of orders and returns. The new funding round will help Happy Returns take that new software to clients with international customers as well, showing return values in local currency and providing the ability to look up orders by international postal codes.

Happy Returns also plans to hire sales and marketing staff to further expand both the number of merchants offering Happy Returns on their purchases and the number of locations where returns are accepted.