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November 30, 2000

Ten Fast Facts: Returns Online

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Returns Online

WHO:
A privately held e-commerce company founded in 1999 by Shannon Hauser, Billy Snipes and John West.

WHAT:
Manages the entire product returns process for online merchants.

WHERE:
Mercer Island.

 

Fast Fact #1: "We take it back" is the company's motto.

Comment: Returns Online is busy "onboarding" its initial customers and may or may not be ready to handle returns from this year's holiday season, says Hauser, CEO. "We're not going to try to [rush] everything for Christmas," he says, citing the complexity of creating system interfaces based on the unique return policies of each customer. "It's not something you just cut and paste," he says.

Returns Online


Fast Fact #2: Big bricks-and-mortar stores with an Internet presence are the company's primary target.

Comment: Hauser declined to name any of the company's customers. Doing so, he says, might put Returns Online in the spotlight. The company prefers that shoppers give merchants the credit for smooth handling of their returns. "We're operating like a submarine," says Hauser. "You as a [shopper] may never know we're doing this."


Fast Fact #3: Going postal is a key.

Comment: Thanks to an arrangement with the U.S. Postal Service, shoppers returning items to clients of Returns Online can simply drop them at the post office. That's because the company has contracted with the Postal Service to recognize the bar code that appears on all Returns Online shipping labels.   


Fast Fact #4: Returns Online also has a partnership with SmartShip.

Comment: SmartShip's software helps shoppers choose the most effective shipping vendor to handle their particular item, which may or may not be the Post Office. Users wanting to return a product simply visit the merchant's Web site, choose a shipping vendor and print a prepaid shipping label -- which includes a bar code, a return merchandise authorization number and package tracking number -- from their Internet browser.


Fast Fact #5: All merchandise handled by Returns Online ends up at a National Returns Center.

Comment: There, Returns Online workers open the packages, examine the contents and prepare the merchandise for whatever form of "asset recovery" the merchant has specificed. Options include everything from returning items to the merchant's shelves to auctioning them to giving them to charity. Meanwhile, Returns Online empowers merchants to issue e-refunds to their customers at any point in the return cycle. Currently, the company has one National Returns Center -- a 75,000-square-foot facility in Covington, Ga. Why Georgia? "My partner would say, 'Cuz I live there,'" says Hauser, referring to Snipes. Besides, he says, another company the pair founded was based in Georgia, making it easy for them to attract good employees there.


Fast Fact #6: Hauser and Snipes previously founded Pharmaceutical Waste Services Inc. 

Comment: Eventually acquired by Browning-Ferris Industries, that company became the premier returns processor for the U.S. pharmaceutical industry, says Hauser, who also has aided in the funding and development of many new ventures through his own firm, ebusiness.com Inc. Snipes is executive vice president at Returns Online and West, the third founder, is general counsel. 


Fast Fact #7:  Hauser is a faculty member at the University of Washington.

Comment: He teaches classes on business plans for product management, software product management and creating a company. In fact, classroom discussions about opportunities in e-commerce -- plus his experience with pharmaceutical returns -- helped inspire the idea for Returns Online. However, Hauser's 10-year stint at the UW will end this quarter so he can devote himself to Returns Online. "Like any entrepreneur, it's the chase, it's the hunt," says Hauser of his attraction to startups.


Fast Fact #8: Hauser estimates the market for online return services at $2 billion a year.

Comment: The size of the market is one reason Returns Online recently attracted a total of $9 million in first-round funding from two prominent venture capital firms, Olympic Venture Partners of Seattle and RRE of New York, says Hauser. Another reason is that no other company provides such a complete returns service, he says. Hauser says it's premature to discuss whether an IPO or acquisition is in the company's future.


Fast Fact #9: Returns Online expects to open additional National Return Centers. 

Comments: Hauser says his biggest challenge going forward is "building facilities fast enough to keep up with the demand." He says the company has entered into discussions that could add 2 million square feet of space spread throughout the country, including a possible location in either Seattle or Portland. He says the company's headquarters is likely to remain in its present Mercer Island location. About 45 regular employees, plus a number of contract employees, work there.


Fast Fact #10: The company's founders spent 20 months laying the groundwork.  

Comments: That included developing customized technology with the help of "heavy-duty" partners such as Cisco and IBM, says Hauser. Hauser says his business philosophy is to provide complete solutions. Otherwise, "eventually somebody else will offer the whole thing." Returns Online charges merchants based on the volume and category of the returns it processes plus the level of service -- cleaning, repairs, etc. -- it provides.



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