As returns continue to plague retailers, Affirm has acquired Returnly, a returns payment platform, for about $300 million, the installment payment company announced on Wednesday. The two companies are expected to close the deal by the end of June.
The company is acquiring Returnly, which gives eligible consumers instant merchant credit upon initiating a return, as U.S. consumers have returned more merchandise, especially with online orders. The National Retail Federation estimates that customers returned $428 billion worth of merchandise last year.
Returnly currently serves more than 1,800 businesses and has processed more than $1 billion in returns. More than 8 million customers have used the platform, per the announcement.
An early investor in Returnly, Affirm's acquisition comes two years after the company raised $8 million in Series A funding. That same year it introduced a returnless refunds feature and debuted instant exchanges via Shopify Plus. Given that returns remain challenging for retailers, the company wants to expand its reach with Affirm, Eduardo Vilar, CEO and founder of Returnly, said in a statement.
Per the NRF's research, online returns doubled from 2019 to 2020 and are a significant catalyst of return growth. In addition to causing financial challenges for retailers, companies also have to deal with the environmental impact of returning items that — due to the complex logistics of evaluating returned goods — largely don't wind up back on shelves for sale.
"We started Returnly to fix the broken returns model that offered consumers and merchants nothing but downside and frustration," Vilar said in a statement.
As Returnly raised money and enhanced its offerings, so has Affirm. Last year, Affirm added Shopify and David's Bridal to its roster of partners, as the company has steadily expanded its customer base. The buy now, pay later platform also raised $1.2 billion in its IPO earlier this year, with an initial price of $49 per share, higher than the anticipated range of $41 to $44 per share.
"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," Max Levchin, CEO and founder of Affirm, said in a statement. "Store credit, issued before the item is actually returned, is now a practical requirement in highly competitive segments like fashion and lifestyle."