- UPS' planned acquisition of Happy Returns will allow it to provide a consolidated returns service for its larger retail customers, CEO Carol Tomé said on an earnings call last week.
- "Retailers estimate that between 20% and 30% of all online orders are returned, and it costs them on average, about $33 to process that return," Tomé said. "So with Happy Returns, we're going to offer consolidated returns for our customers, which will reduce their handling costs."
- Returns at Happy Returns locations are aggregated across merchants and shipped together to company Return Hubs, which sort and palletize items for bulk shipping back to the original merchant. Happy Returns says this can save merchants up to 40% on return shipping.
New acquisitions, including the Happy Returns deal, are one approach UPS is taking to grow "ahead of the market" in small parcel delivery, Tomé said. Purchase terms weren't disclosed, but the CEO said the acquisition plus the purchase of MNX Global Logistics will total about $1.3 billion once they both close.
UPS' returns business has seen a surge in growth since the COVID-19 pandemic accelerated e-commerce activity, and the company wants to expand further into reverse logistics to build out its logistics-as-a-service offering.
Happy Returns' robust returns network provides a straightforward opportunity for UPS to do just that.
RMW Commerce Consulting founder and CEO Rick Watson said the deal is "a win for everyone," in part by expanding the number of Happy Returns locations. The company has established more than 10,000 "Return Bars" for customers to make box-free returns, including at Ulta Beauty, Petco, Staples and GameStop stores. Under UPS, that number will grow to 12,000-plus locations.
"So, better for customers, more profitable for UPS, and broader reach? Sounds like UPS could take even more share in returns," Watson said in a LinkedIn post.
Some of Happy Returns' current locations are tied to UPS rival FedEx. In 2020, the company announced an agreement with FedEx to expand its in-person returns service to more than 2,000 FedEx Office locations. FedEx has since rolled out its own consolidated returns service that leverages its less-than-truckload services.
"[It's] going to be interesting to see if Happy Returns stays in FedEx locations or is this more a tech play to get the Happy Returns tech in UPS stores and out of FedEx," said Paul Stroup, a former senior manager of data science with Amazon, in a LinkedIn post.
The deal also gives UPS closer ties to the more than 800 merchants currently using Happy Returns, including Lands' End, Levi's and Gymshark. Much of UPS' returns volume has historically been driven by Amazon customers at The UPS Store locations, but those returns have become more expensive for some shoppers this year.
"While UPS has a great experience, and they accept Amazon returns, it's expensive, at least relative to what consumers have been used to," Watson said.