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A start-up's plan to take the headache out of online refunds

Online shopping may be easy, but making returns for those simple purchases can be a real headache. At least 30 percent of all products ordered online are returned compared to around 9 percent in brick-and-mortar stores, according to Ecommerce. It's a phenomenon costing retailers billions. Recognizing the problem Happy Returns is on a mission to streamline the process for consumers, making refunds faster and more efficient.

"Today when you buy a product online, you have to box it up. Often, you have to print out a shipping label, tape it together, go to the post office," said Mark Geller, COO and co-founder of the one year-old Santa Monica, California start-up. "And it can often be a delay of seven to 10 days before you actually get your money."

Happy Returns provides in-person returns for online purchases, speeding up the refund process for customers. Shoppers simply bring their online purchases to one of the start-up's 40 return bars around the country, allow the item to be inspected, provide an email address and have their refund initiated on the spot. The service is free for consumers, and Happy Returns is paid a per-item fee by the 10 retailers it works with, all of whom operate online, including Tradesy, Everlane and Shoes of Prey.

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"We enable the same ease of use and convenience of returning in-store for retailers that don't have an existing store," said David Sobie, CEO and co-founder.

Sobie and Geller met while working at HauteLook, a Los Angeles-based flash retailer, and began developing the idea for Happy Returns when HauteLook tested a similar option for customers, allowing them to return online purchases in store at Nordstrom Rack.

The founders of Happy Returns: COO Mark Geller (left) and CEO David Sobie
Source: Happy Returns
The founders of Happy Returns: COO Mark Geller (left) and CEO David Sobie

Geller, who was still at HauteLook at the time, and Sobie began raising money in July of 2015 and closed their seed round the next month, raising $1.9 million from investors, including Upfront Ventures, Brilliant Ventures and Lowercase Capital. They opened their first return bar in April of 2016.

"We started getting really positive customer feedback. The themes were how easy it was to use and how much people liked getting their return immediately," Sobie said, quickly realizing they were on to something.

While malls have been hard-hit around the country by the changing retail environment, the company says its model won't be impacted, as the bars are located in high-end properties, like Santa Monica Place and the Houston Galleria, which aren't struggling in the same way traditional malls have been. And while 30 of the return bars are located in malls, the remaining 10 are in boutiques in 14 metros nationwide.

Since its launch in 2016, Happy Returns has opened 40 return bars nationwide, including this one at the Shops at North Bridge in Chicago.
Source: Happy Returns
Since its launch in 2016, Happy Returns has opened 40 return bars nationwide, including this one at the Shops at North Bridge in Chicago.

Despite retail's challenges, Geller maintains the concept is a win for all parties involved. Some investors agree. This month the company raised an additional $4 million in a series A round led by Upfront Ventures.

"It's great for consumers, because they get a return process that is easy and fast. It's great for the locations hosting return bars, because they're obviously getting the foot traffic. And it's great for retailers, because not only are they providing their customers with a service that they want but they're also saving money in the process," he said.