United Parcel Service (UPS) announced it will acquire reverse logistics company Happy Returns for an undisclosed amount.
Happy Returns manages returns for online retailers through kiosks called Return Bars. Customers use Return Bars to send back purchases from online retailers. UPS will acquire the vendor from PayPal, which purchased it in 2021.
“By combining Happy Returns’ easy digital experience and established drop-off points with UPS’s small package network and footprint of close to 5,200 The UPS Store locations, box-free, label-free returns will soon be available at more than 12,000 convenient locations in the U.S,” says UPS CEO Carol Tomes in a statement.
Happy Returns says it has more than 10,000 locations, many of which are through partnerships with retail chains Ulta, Petco, and Staples. It works with 800 retailers and has grown revenue to 10 times 2020 levels, Happy Returns says.
Happy Returns charges retailers a monthly service fee for handling returns and a per-item fee that varies, depending on the processing work required. Retailers with return kiosks benefit from the increased foot traffic, which can lead to browsing shoppers and potential sales.
“In recent years, the growth of Happy Returns has accelerated, and we’ve built an enterprise-grade solution. This new chapter is a natural next step for Happy Returns and allows us to harness the power of the UPS network to transform the returns industry,” says Happy Returns CEO and co-founder David Sobie.
Returns are a growing part of the retail business
Returns can be costly for retailers. Companies pay an average of $26.50 to process $100 in returned merchandise, The Wall Street Journal reported in May. In 2022, about 16.5% of retail purchases were returned, totaling about $816 billion, according to the National Retail Federation.
In 2022, 45.7% of retailers in the Top 1000 offered online returns processing to consumers. That’s a slight decrease from 47.4% in 2021. The Top 1000 is Digital Commerce 360’s ranking of the largest online retailers in North America.
Consumers have come to expect easy online returns. In a Bizrate Insights and Digital Commerce 360 July survey of 1,017 online shoppers, 52.3% cited free return shipping as one of their top five considerations when making an online purchase. However, relatively few consumers say they’ve used a return kiosk. In the same survey, 5% of respondents said they’d used a Happy Returns kiosk or similar service for a non-Amazon purchase. Another 7.1% said they’d dropped a return off at a retailer like Walgreens, which offers a similar service. 9.7% have returned an online order to a mall-based pickup and return center.
UPS serves more than half the Top 1000
532 online retailers in the Top 1000 use UPS for their fulfillment — either exclusively or in combination with other carriers. 65.6% of Top 1000 sales come from retailers using UPS.
More than half of web sales in the Top 1000 come from merchants using UPS for at least some of their shipments. The cumulative 2022 web sales of Top 1000 retailers using UPS is about $669.98 billion.
However, hundreds of the 532 online retailers using UPS to ship items do not use it exclusively.
75 merchants in the Top 1000 exclusively use UPS for their shipping. Those 75 accounted for $24.97 billion in 2022 web sales.
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