The Wall Street Journal Discusses Optoro’s $75 Million Funding Announcement
(The Wall Street Journal) – Logistics technology specialist Optoro Inc. has raised $75 million in new funding to expand development and sales of its software aimed at helping retailers handle returns and resales of merchandise, a capability taking on greater importance under e-commerce.
The new funding round, led by Franklin Templeton Investments, a unit of Franklin Resources Inc., BEN 5.90% brings the company’s total capital raised to $200 million. Optoro said the round included new and existing investors, including a large state pension fund. The company declined to disclose its current valuation.
Optoro is one of a handful of third-party software and logistics companies working to improve the costly returns process, known as reverse logistics, for retail sales that are increasingly happening online. Optoro estimates the annual U.S. market for customer returns is $380 billion and is growing rapidly as consumers get more comfortable buying and returning online purchases.
“The return rate from e-commerce sales is two to three times the return rate of brick-and-mortar, sometimes higher in fashion and apparel,” said Optoro co-founder and Chief Executive Tobin Moore said. “With the majority of retailers also paying for shipping on returns, it’s a major logistics cost.”
The volume of returns at stores was long small enough that it wasn’t a top concern for many retailers, even though dealing with returned merchandise was complicated and time-consuming. But as more shopping moves online, advances in technology for processing e-commerce returns present a big opportunity to pick up savings, reverse-logistics providers say.
Brands and retailers are trying to improve their reverse logistics, both because it cuts down on waste and because they say it improves the e-commerce customer experience. An Optoro survey of shoppers found that 71% said they were more likely to shop again at a retailer if they had a positive returns experience.
Some retailers have developed their own processes for accepting returns. Amazon.com Inc. allows customers to return items purchased online at any of its Whole Foods stores and branded lockers in thousands of other locations. Walmart Inc. developed a smartphone app that processes returns and refunds, so shoppers can quickly and easily return items purchased online to a store.
The business is drawing a growing lineup of startups.
Happy Returns accepts returns from consumers on behalf of several retailers at 120 kiosks in malls and stores in 20 metro areas. Software company goTRG developed high-definition scanners and cameras that assess the quality of a returned item and determine whether it should be resold, refurbished or should be passed along to a reseller or other channel.
Optoro’s systems are deployed at 20 sites in the U.S., and the company plans to add 10 more by the end of the year. Optoro has one facility of its own in Tennessee, where it develops and tests new technologies.
Mr. Moore said many of Optoro’s customers are preparing for record return volumes in the second half of this year, when sales and shipping volumes typically surge ahead of the holidays.
“There’s a big rush this time of year in preparing for returns season, making sure you’re buttoned up and have the best technology in place to deal with all the returns that will be associated with holiday season,” he said.
