PayPal Acquires Happy Returns Logistics Business

PayPal announced that it’s acquiring Happy Returns, a returns solution provider that offers online shoppers access to easier ways to send back unwanted merchandise to retailers without having to box it up and ship it themselves.

The company today offers a network of over 2,600 drop-off returns locations in the U.S., including those in over 1,200 metros and in every U.S. state.

It also has relationships with hundreds of brands that have been using its returns software and reverse logistics services. The company says it will continue to offer its returns experience to online retailers and shoppers as a part of PayPal.

Founded in 2015, Santa Monica-based Happy Returns’ value proposition was to take some of the overhead and cost out of the returns process for online retailers. Because online shoppers can’t inspect items they buy directly, online retail tends to see higher return rates, especially in apparel. Happy Returns found that online items are 3 to 4 times as likely to be returned than those purchased in-store, for example.

Meanwhile, today’s retailers have to compete with giants like Amazon and Walmart, both of which enable returns more easily for their customers by way of their large brick-and-mortar footprints — Amazon with Whole Foods other locations, and Walmart with its own stores. In fact, the foot traffic that offering an Amazon returns desk or locker system in-store has led retailers like Kohl’s and Stein Mart to embrace the enemy by catering to shoppers with Amazon returns in their own stores.

Today, the Happy Returns solution offers a combination of software, services and logistics that allows retailers to manage their returns through their own retail stores, by the carrier, as well as through Happy Returns’ “Return Bar” locations. These are found in physical retail stores like Paper Source, Sur La Table, Cost Plus World Market, and others. The service has been used by several digitally native brands, including Everlane, Rothy’s, and Parachute Home, among others.

Happy Returns has also been closely working with PayPal throughout its history, it notes. And notably, PayPal made a strategic investment in the business in 2019, as part of an $11 million financing round.

Following the deal’s close, Happy Returns will continue to work with retailers and shoppers both on and off PayPal’s platform, it says. The company’s co-founders, David Sobie and Mark Geller, and its full 120+ team will join PayPal and will report to Frank Keller, VP Consumer In-Store and Digital Commerce at PayPal.

PayPal is not disclosing the deal terms. To date, Happy Returns had raised $25 million in funding.

“This is an incredibly exciting milestone for our company, and it would not have been possible without the hard work and dedication of our entire team,” an announcement on Happy Returns’ website reads. “We are so proud of what our team has accomplished and are grateful for the tenacity, creativity and empathy Happy Returns employees bring to work each day. We are confident that the best is yet to come, and are looking forward to our next chapter as part of the PayPal organization.”