Returns are a regular part of shopping. However, as more people shop online, retailers run into more instances of customers buying several clothing sizes of the same item with the intent to return what doesn’t fit. That has created quite the chaotic returns process.
As a result, retailers have not only lost out on sales, but depending on their returns process, are also paying to get that item back into its inventory. The problem is so big that returns accounted for more than $816.7 billion in lost sales for U.S. retailers in 2022, according to the National Retail Federation.
With a big problem like this, there is no shortage of startups out to solve it. However, it’s not everyday that one’s tech approach gets the attention of delivery powerhouse Amazon.
ReturnGO announced today that it and Amazon Multi-Channel Fulfillment entered into an agreement whereby ReturnGO will provide its return and exchange process for those 300,000 merchants on Amazon’s e-commerce third-party logistics platform.
“We already have merchants in beta and are working with Amazon to educate them on this solution,” Aviad Raz, co-founder and CEO of ReturnGO, told TechCrunch. “Now that we are in a recession, it’s a big aspect of saving costs and retaining revenue. We still see growth and returns not going anywhere. Big brands are starting to charge for returns, but that is not so significant yet that we see friction for customers when they want to return items.”
Raz, Assi Abramovitz and Eyal Rosenthal founded their company in 2020 and currently employ 45 people across Israel, the New York area and the Philippines. As Raz explained it, ReturnGO not only provides return options, but a “post-purchase operating system” that aims to reduce the reverse logistics costs for online retailers while also making the whole process more sustainable.
Raz boasts that ReturnGO’s differentiator is that the automated return and exchange process can be used with any e-commerce tech stack and gives customers more return options. That includes an easier product exchange program to reduce the need for retailers to issue full refunds.
Its software-as-a-service solution is already being used by more than 2,700 Shopify merchants to process over 283,000 returns each month. This makes the timing quite interesting for ReturnGO. Shopify sold its logistics business to Flexport in May. Then in August, Shopify partnered with Amazon to enable customers to purchase on Shopify and have products delivered through Amazon’s fulfillment network.
“Most of these merchants are in the U.S., and now they can use ReturnGo to do their third-party logistics,” Raz said.
Currently, the company is experiencing about $1.8 million annual recurring revenue, or 2.5x in growth from last year, according to Raz.
This new deal also comes as the company secured an additional $4.8 million in growth capital, led by Trestle Partners. ReturnGO raised $6.5 million in seed funding last June.
Raz said the company now has a runway through April 2025 and is steadily working its way up the mid market and into enterprise. ReturnGo just released a tracking solution in beta so that shoppers can get notifications at each step. Once that is ready, the company plans to sell bundled solutions with returns and tracking.
It is also working with companies wanting to donate returned items, pick them up or do further upsell. In addition, Raz is hiring in the areas of go-to-market and sustainable sales. The company also plans for a Series A early next year, Raz said.
