The digital commerce payments platform Affirm Holdings Inc. will pay $300 million to acquire e-commerce returns specialist Returnly, saying Wednesday that the move will help it meet soaring consumer expectations for quick accommodations when exchanging online purchases.
The move comes as reverse logistics is getting more attention from retailers, e-commerce platforms, and third party logistics providers (3PLs), who have seen their returns processing costs spiral upward as e-commerce volumes exploded during the pandemic.
Offering a solution to that challenge, San Francisco-based Returnly says its platform manages “online return experiences and post-purchase payments.” While its name may not be familiar to online shoppers, Returnly says it serves more than 1,800 merchants and has been used by over eight million consumers.
The firm’s service allows eligible consumers to receive an instant credit as soon as they initiate a return—allowing them to order a replacement item immediately instead of waiting until their return is fully processed. In the meantime, Returnly assumes the risk for the eventual product return, a strategy that allows merchants to capture higher return-to-repurchase rates, increase revenue from returns, and log higher customer satisfaction, the firm said.
Affirm, which is also based in San Francisco, said it made the acquisition as returns continue to be a source of increased costs and complexities for merchants. Online returns, which often occur at triple the rate of brick and mortar retail, more than doubled from 2019 to 2020 during the coronavirus crisis. By value, U.S. consumers returned an estimated $428 billion in merchandise to retailers in 2020.
“Over the last few years, alongside the rapid growth of online shopping, consumers’ expectations of accommodations for returns and exchanges have increased significantly,” Max Levchin, Affirm’s CEO and founder, said in a release. “In 2019, Affirm invested in Returnly because we recognized their technology’s ability to help merchants remove friction from returns, drive loyalty, and retain more customers. Store credit, issued before the item is actually returned, is now a practical requirement in highly competitive segments like fashion and lifestyle.”
