ReturnGO’s AI-powered returns management platform enables online stores to efficiently manage returns and exchanges. The startup has completed a successful seed fundraising round led by the TPY Capital fund.
The start-up company ReturnGO has announced the completion of a $6.5 million seed raise. The round was led by the TPY Capital fund, along with other funds including Cresson, Good Company, SeedIL and Aristagroa. Leading angel investors such as Yuval Tal, Dan Adika, Benny Schneider and Haim Bar-On also joined the round.
ReturnGO was founded in July 2020 by Aviad Raz (CEO), Assi Abramovich (CTO), and Eyal Rosenthal (CRO) and currently employs 20 people at the R&D center in Ramat Gan. Thanks to the raise, the company plans to expand its workforce in the coming year and recruit additional employees for development, research, marketing and sales.
ReturnGO has developed a machine-learning-based platform that enables efficient management of returns and exchanges for products purchased on e-commerce sites. The return phenomenon that Amazon set as a standard is one of the great challenges for the e-commerce industry, and poses a serious threat to its profitability and even the survival of online stores. In the United States alone, for example, returns of products from online stores reach 30% and more. The monetary value of returned products reaches $428 billion per year, of which $309 billion are a complete monetary loss. In 80% of returns, customers demand and receive a full refund, and are willing to exchange products in only 20% of cases.
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“We have been able to turn returns from a painful financial problem into a lever of revenue and improve the relationship with customers.” Aviad Raz, co-founder and CEO of ReturnGO
ReturnGO’s platform, which has already been implemented as a SaaS (Software as a Service) in more than 1,500 Shopify stores, including leading brands such as Decathlon in the US, changes the relationship dynamics between buyers and stores and benefits both parties. It presents the customer with a friendly interface with several return alternatives, tailored to their behavior patterns in the store: return the product and receive a full refund, get an incentive to buy another product from a data-driven personalized list, or donate the product to a social organization.
ReturnGO currently manages about 100,000 returns per month. The innovative and first of a kind ability to offer customized alternative products to customers in real-time has improved the number of product exchanges by tens of percent (instead of full refunds). The solution is now gaining a lot of traction and popularity, with more than 150 positive reviews (5-star rating), more than any other solution on the market.
Aviad Raz, co-founder and CEO of ReturnGO said, “We have been able to turn returns from a painful financial problem into a lever of revenue and improve the relationship with customers. Most customers who return products and receive a full refund suffer from a slow and cumbersome process, and will probably not buy again on this site- so the damage is greater than just the canceling of a specific transaction.”
Customers who replace their order are the most loyal and profitable in the long-term, and many of them are happy to use an incentive to purchase a more expensive product than the returned one. Donating a product to a social organization is an alternative that has gained popularity among customers, and guarantees the store a tax refund on the donation.
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Efficient management of returns and exchanges wastes less resources and has a significant impact on the environment. “Even now, we prevent the expensive and unnecessary shipping of large-scale products back to the store warehouses, where they usually prefer to destroy them rather than return them to stock.”
According to Aviad, “Following the fundraising, we will continue to develop the system and work to deploy it among thousands of other online stores and leading brands, directly and through other platforms. The very positive feedback we receive from Shopify stores and their customers is an excellent basis for our expected growth.”
“There are a number of macroeconomic and social-trends that we believe ReturnGO is likely to benefit from, including the growing challenges in the reverse supply chain – returning products from customers to manufacturers,” said Dekel Percy, managing partner at TPY Capital who led the round. “The need for solutions to manage returns and reduce them is not only a derivative of supply chain problems that the world experiences in every industry and sector, but also internalizing the social and ecological implications of huge-scale returns. We believe ReturnGO has been able to identify and provide solutions which minimize the extent of the problem, reflected in the impressive adoption of paying customers.”