Flexible payment provider Affirm is expanding its range of services to include the post-purchase experience with the acquisition of online returns solution Returnly for approximately $300 million. Retailers such as Walmart, Bonobos and Peloton currently use Affirm to offer customers flexible payment options such as Buy Now, Pay Later.
Returnly currently facilitates returns and replacements for online orders for more than 1,800 merchants. The company reports that its model — offering consumers an instant merchant credit at the time a return is initiated — helps retailers drive higher return-to-repurchase rates. Since it was founded in 2014, Returnly has processed more than $1 billion in returns and been used by 8 million shoppers.
The acquisition comes at a time when returns are in the spotlight: the return rate for goods bought online is typically 3X higher than those purchased in-store. As the COVID pandemic drove ecommerce increases, online returns more than doubled in 2020 from the year prior. Those returns come at a high cost to retailers in terms of both the bottom line and customer satisfaction. Now, with the growth in ecommerce seemingly set to continue, returns have become a key focus at many companies.
“Over the last few years, alongside the rapid growth of online shopping, consumers’ expectations of accommodations for returns and exchanges have increased significantly,” said Max Levchin, CEO and Founder of Affirm in a statement. “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.”