UPS Invests In Returns Specialist Optoro

As retailers will soon enter the peak returns rush that follows the holiday shopping season, UPS is reportedly making an investment in logistics provider Optoro Inc., a company specializing in retail returns and reselling.

First launched in 2010, Optoro Inc. provides a software to sort and analyze unwanted and returned merchandise, using its client’s own sales information and algorithms to route returns to online marketplaces and other channels so retailers receive the best returns on their returns. Its current customers include Home Depot, Best Buy, Target and Jet.com.

Returns have become an increasingly costly burden for retailers in recent years as consumers have steadily moved toward online shopping. According to data from the National Retail Federation, about 15 percent of holiday sales were returned last year — an estimated $90 billion worth of merchandise — while all of last year’s returns cost U.S. retailers some $260 billion in lost sales.

UPS joined several other existing and new investors in a $30 million Series D funding round, though the shipping giant has declined to comment on how much it invested.

Other participants in the latest funding round are Kleiner Perkins Caufield & Byers, Revolution Growth, Generation Investment Management LLP, Tenfore Holdings, Swan & Legend Venture Partners and the Maryland Venture Fund. All told, Optoro has raised some $119.2 million over its five funding rounds.

UPS and Optoro have said that the companies are planning a joint offering to help retailers address a range of supply-chain concerns.

UPS isn’t the only major shopping company investing in returns technology to keep up with the pace of eCommerce. In early 2015, FedEx paid $1.4 billion to acquire GENCO Distribution System Inc., a third-party logistics provider that also specializes in product returns. With Genco, FedEx is able to offer its customers a package return service as well as delivery. FedEx also can ship returned goods to markets where it can be sold at a higher price — some returned merchandise will find a better value proposition when sold in China, India and Latin America.