College students across the country are heading back to campus this month, moving into dorms, catching up with friends, and dropping thousands of dollars on supplies for the upcoming year.
According to a survey by Deloitte, back-to-college spending is expected to reach $25.5 billion in 2018, or $1,330 per household. While retailers battle for their share of that pie, startup Happy Returns is busy working behind the scenes to encourage more college students to do their back-to-school shopping online.
The startup, based in Santa Monica and founded by alums from HauteLook and NordstromRack.com, offers a way for shoppers to return e-commerce purchases at real-world kiosks. Having a physical place to return unwanted items is supposed to reduce the friction in online shopping and help brands cut down on return shipping costs.
Beginning this fall, Happy Returns will be setting up kiosks—which it calls “Return Bars”—at the University of Arizona, University of Washington, North Carolina State University, Portland State University, and Gonzaga University, with plans to expand further into the college market in coming years. Students at these universities will be able to bring products they purchased from participating e-commerce retailers to the Happy Returns kiosks set up on campus for an immediate return.
“We have long believed that colleges and universities would be a good fit for Happy Returns,” says Happy Returns CEO David Sobie. “Students prefer to shop online because of its convenience, so a service like ours that makes returns hassle-free makes perfect sense.”
Sobie says having a physical place to return online purchases is an amenity that makes campus life easier for students in their late teens and early twenties. As universities vie to attract a new generation of students who’ve gotten used to a high standard of living, they’re using amenities, like Happy Returns’ Return Bars, as a lure.
The service is also lucrative for retailers. As Sobie explains, partnering with Happy Returns allows brands to reduce the friction in online shopping and decrease return shipping costs. Happy Returns has partnered with a number of popular online retailers, including Rothy’s, Tradesy, Everlane, Outerknown, Eloquii, and UNTUCKit.
Before making the decision to move onto college campuses, Sobie says he and his team looked at two data sets. First, they looked at the results of a research study into shopper attitudes toward returning online purchases, which found that shoppers in the Millennial and Generation Z groups make most of their purchases online and were the groups most attracted to a service like Happy Returns. Second, Sobie looked at the success of Happy Returns’ Return Bar at Stanford Shopping Center in Palo Alto, which has been up and running for just over a year. In that time, the Palo Alto kiosk has become one of Happy Returns’ busiest locations.
“The property is adjacent to the Stanford campus, and we observed a flood of dot-edu email addresses completing returns,” Sobie said. “We concluded that our service had a strong product market fit with college students.”
But moving onto campus wasn’t without its challenges. For example, Sobie says he quickly discovered that most college bookstores—where Return Bars would be located—are operated in conjunction with a few big players, like Follet Education, which operates the Portland State and Gonzaga University bookstores. Follet operates over 1,250 campus stores nationwide, which means opening Return Bars inside university bookstores is more like partnering with a big business than a local bookstore.
Still, Sobie has plans for continued expansion into the college market, along with additional shopping malls and independent boutiques.
“College and university campuses are our newest vertical, and we expect to expand from these five to 10 to 15 by year end,” he says. “While it’s still early, we believe our 2019 objectives will include Return Bars at 150 to 200 campus locations.”
Stephanie Miles is a senior editor at Street Fight.