PayPal Acquires Happy Returns to Expand Post-Purchase Experience

Need to Know

• Happy Returns, the box-free, in-person merchandise return facilitator, has been acquired by PayPal.
• The acquisition will help extend PayPal to the post-purchase experience, allowing the payments processor to further expand its reach to all touchpoints in the online shopping experience.
• Happy Returns’ reverse logistics services currently include 2,600 drop-off locations in more than 1,200 US cities.

Analysis

PayPal is continuing to expand its reach beyond mere payments processing, announcing that it has acquired the reverse logistics company Happy Returns.

Happy Returns is a box-free, in-person merchandise return service, which allows consumers to return or exchange goods without the need for packaging or printing out a shipping label. Under the new partnership with PayPal, Happy Returns’ technology and platform will extend PayPal’s commerce platform “beyond discovery and payments to the post-purchase experience,” according to a Happy Returns blog post announcing the acquisition. Happy Returns plans to now focus on improving its platform and expanding its footprint.

The acquisition by PayPal comes as a spike in online shopping, brought on by the COVID-19 pandemic, has resulted in widespread disruption to the returns and exchanges process for both consumers and retailers. Happy Returns currently offers 2,600 drop-off locations in 1,200 cities across the US, and collaborates with hundreds of brand partners, allowing consumers to easily return or exchange products purchased online that may not have met their expectations.

PayPal and Happy Returns already have an established relationship: PayPal invested $11 million in the returns company in 2019. At the time, Happy Returns co-founder and CEO David Sobie said that the investment from PayPal “speaks to the broader challenge or mission PayPal has, to make e-commerce as easy and frictionless as possible.”

Indeed, for PayPal, the acquisition marks yet another step forward in the company’s expansion beyond mere payments processing and into all facets of e-commerce. The company also operates Honey, the digital couponing service, as well as a discovery vertical (Offers & Deals) and Venmo, the money-sending and payments processing app.

The company also recently announced its plans to expand into some banking services, with high-yield savings accounts, check-cashing services, and stock-investing capabilities coming later this year, part of CEO Dan Schulman’s strategy to transform PayPal into a one-stop “super app.” The company has already introduced its own buy now, pay later feature, Pay in 4, offering financing on purchases between $30 and $600 made within the app.

PayPal saw historic growth in 2020, as its introduction of new features and capabilities not only kept pace with a spike in e-commerce but satisfied the increased need for flexible online payments and money-sending tools brought on by COVID-19. With Venmo, the company introduced the ability to cash COVID-19 stimulus checks and launched QR code payments in CVS stores across the U.S.