As the economy has chugged along, so have retail sales, which last year capped their strongest year since 2014. Online sales has been especially brisk, growing 16 percent between 2016 and 2017 alone, according to the U.S. Commerce Department, which estimates that consumers spent $453.5 billion online last year.
Of course, with every booming market comes supporting cast members that benefit. Such is the case with eight-year-old, Washington, D.C.-based Optoro, which itself just rang up $75 million in new funding. A logistics company, Optoro’s software helps retailers — both online and off — more easily re-sell inventory that has been returned by customers.
That’s a big number. The overall amount of merchandise returned as a percent of total sales last year was 10 percent in 2017, according to the National Retail Federation. In dollars, that’s $351 billion.
Right now, that includes sales from big box retailers and many other “legacy” companies that allow shoppers to buy items — and return them — in their stores. But as online sales rise, so do online returns. Indeed, Optoro cofounder and CEO Tobin Moore tells the WSJ that the “return rate from e-commerce sales is two to three times the return rate of brick-and-mortar” and “sometimes higher in fashion and apparel.” And with most retailers also paying for shipping on returns — after all, a happy customer is a repeat customer — it’s a a major logistics cost for these online brands.
Little wonder that Optoro, which uses data analytics and multi-channel online marketing to determine the best path for each item (ostensibly maximizing recovery and reducing environmental waste in the process) is a hit with a growing base of customers.
A growing number of investors is getting behind the company, too. Optoro’s newest round was led by Franklin Templeton Investments, but the company has now raised at least $200 million altogether, including from Revolution Growth, Generation Investment Management, Grotech Ventures, and even the UPS Strategic Enterprise Fund.
Source: Tech Crunch