ReturnLogic takes on retail's return challenge

ReturnLogic wants to equip e-commerce companies and retailers with the tools needed to solve a multibillion-dollar challenge — customer returns.

Why it matters: Around $761 billion in merchandise sold last year (about 16.5% of total US retail sales) was returned to retailers, according to a report by the National Retail Federation and Appriss Retail earlier this year.

• And the return rate grew from the previous year for products bought online. About 21% of online purchases were returned, the report finds.

Driving the news: ReturnLogic closed an $8.5 million Series A earlier this month, to further scale its technology to help the industry solve that dilemma, CEO Peter Sobotta tells Axios.

• The round was led by Mercury and Revolution’s Rise of the Rest Fund, White Rose Ventures and Ben Franklin Technology Partners participated.

How it works: ReturnLogic provides retailers with returns data through an API that can be plugged into any e-commerce platform, allowing them to adopt and automate their returns process.

• “We are positioning it where retailers are consuming our API to build their version of what they need in terms of returns,” Sobotta says.
• ReturnLogic also aims to improve churn retention and lifetime value, whereby retailers can make more money if they lower prices, as it reduces the chance of items being returned.

What’s next: Fresh capital will help ReturnLogic build its API capabilities, expand its product and engineering team, and move beyond working primarily with Shopify.

• “Shopify is a great market, we're growing well there and we expect to continue to grow. But our real play is looking beyond Shopify and being platform agnostic. And that's the API that we're investing in,” Sobotta says.
• “Our vision is to be the operating system of returns,” he adds. “Any platform, any policy, any workflow.”

State of play: “Returns are becoming more and more of a focus the more pressure there is on retailers,” Sobotta says of the current macroeconomic environment.

• Despite e-commerce slowing down from 2020, Sobotta says his company has seen consistent growth, which speaks to the maturity of e-commerce. The executive declined to disclose financials for ReturnLogic.
• As retailers improve their e-commerce and omnichannel operations, he says they will also look to improve or boost their bottom line, including weeding out inefficiencies in how they handle returns.

Yes and: In addition to opening up to additional e-commerce platforms, he says ReturnLogic wants to help solve more complicated problems with returns, like warranty claims.

• The company expanded its warranty workflow features this year to allow retailers to automate warranty requests, he says, adding that this speaks to the additional markets it can unlock.

The bottom line: Returns aren’t just the cost of doing business, Sobotta says.

• “That's what old school bricks-and-mortars say. That's no longer what modern companies say," he says. "Reverse logistics is a key competency, and that's going to continue to be focused on.”