Returnmates, now Sway, bags $19.5M Series A to manage e-commerce returns

Processing returns is a big job for retailers. Total returns for the industry amounted to $743 billion in merchandise in 2023, according to the National Retail Federation and Appriss Retail.

Retailers have tried making it easier for customers to return items. For example, Amazon partnered with Kohl’s and Target started accepting returns from your car. Startups have also come in with new technologies to manage the delivery and return experience.

Returnmates, now rebranded as Sway, is the latest to attract new venture capital for its approach to delivery and returns that focuses on the customer. The Los Angeles-based company raised $19.5 million in Series A led by 7GC. Additional participants include Blackhorn Ventures, Lightshed Ventures and Rise of the Rest Revolution. To date, the company has raised $25.6 million.

The company rebranded to Sway as a way to show its evolution beyond returns to last-mile delivery capabilities, company co-founder and CEO Eric Wimer told TechCrunch via email.

“We have built solutions to reduce retailers’ costs, lower the environmental impact and remove the friction for shoppers,” Wimer said. “For the shopper, Sway’s doorstep returns program meets the customer where they are. No more printing labels, repackaging or waiting in line at the Post Office — you can process your return from the comfort of your home.”

Wimer, an early employee at Uber, paired up with co-founder Kristian Zak to take on the package delivery and returns experience after an ill-fated trip to the Post Office in 2020. Sway’s approach relies on a two-way communication platform and a network of driver-partners to monitor purchases from receipt at the door through to any returns.

Shoppers utilize the two-way SMS platform and tracking page to get a 30-minute delivery/pickup window. They can add access instructions and add packages to their pickup.

The company offers retailers next-day and two-day delivery services as well as a doorstep return and exchange product that cuts the return cycle from a week to less than three days on average.

Since inception, brands using Sway have seen a 66% reduction in lost package rates and a 20% increase in repeat purchases compared to legacy carriers, according to the company.

“A return that goes through the Sway network is cheaper than one that gets shipped back individually to the retailer,” Wimer said. “We verify the item in our warehouse before it gets shipped back, thus preventing fraud and allowing us to trigger an instant refund. We also consolidate multiple returns into one box, reducing the per unit shipping costs and removing the need for individual repackaging.”

Since August 2021, Sway expanded to 20 cities and grew its team from five to 100. During the same period, it grew revenue 14x and increased its customer base 7x.

Sway is currently active in California, Texas, Washington, Washington, D.C., Maryland, Virginia, New York and Florida. The new funding will enable the company to continue with technology development, grow its team and expand coverage from 20 to 25 cities, Wimer said.

“Given the revenue and customer growth over the last couple of years, the capital was critical to expanding our infrastructure, technology and footprint to better support our brands, shoppers and driver partners,” Wimer said.