Optoro’s 2023 Impact Report

A Message from Our CEO

Optoro’s Milestone Year & Looking Ahead

As I reflect on 2023, I am moved by the remarkable milestones that defined the past year at Optoro. My first year with the company has been marked by tremendous progress and growth. Leveraging the momentum in place when I joined, we successfully furthered our mission and began to fully realize the potential impact we could have on making every return simple and efficient through great technology so that we can make shopping easy and sustainable for everyone.

Returns continue to be one of the most challenging aspects of retail, and in 2023 the market looked to our team for insight, trends, and problem-solving opportunities. In fact, our insights and thought leadership were cited in 189 unique media pieces, producing more than 400 pieces of overall coverage, including hot topics like:

I am continually inspired by the unwavering dedication of our team and partners, whose collective efforts led Optoro to its most successful year. Our proudest accomplishment continues to be the continued success our customers and partners are seeing with regard to returns. One customer was able to activate a net-new revenue stream for returned baby gear items that previously had been sent to recycling — boosting both revenue and the circular economy while recovering 90% of the value of the returned goods. Another retailer launched our exchange offering and increased their average order value by 37% while retaining over $800K in revenue that previously would have been lost to refunds. And a renowned footwear brand transformed 99% of returned, non-new inventory that was previously sent to recycling into a refurbished resale channel, amounting to a 45%+ increase in financial recovery and a $30M+ impact on the bottom line.

We forged a strategic partnership with Gap Inc., and together, we are teaming up to delight consumers and bring innovation to the supply chain to drive more value and promote circularity across their brands including Old Navy, Gap, Banana Republic, and Athleta.

On the product side, we expanded Express Returns Drop-offs and introduced an industry-leading Express Returns Home Pick-ups service across 36 markets, significantly enhancing the convenience of returns and exchanges for shoppers. We continued to enhance our software products, enabling more self-service and speeding implementations so that our Returns Processing software could deliver more value for more customers.

We also had exciting developments within our organization. By articulating a new mission, vision, and values, we successfully aligned our team around a shared goal for the path forward. The Diversity, Equity, and Inclusion Committee made significant strides in providing learning and development opportunities, while the Women’s Group collaborated with our Talent & Culture team to launch a comprehensive, firm-wide mentorship program.

2024 is poised to be another landmark year for Optoro. With new additions to our leadership team and a strong product roadmap, Optoro is positioned to deliver excellence and value for retailers, brands, and 3PLs in need of returns transformation.

As we go on on this journey, we remain steadfast in our commitment to sustainability and the circular economy. We are confident that this commitment, along with our continued innovation and dedicated team, will deliver impact for our shoppers, retail customers and partners, and the planet.

Thank you to all our customers, partners, and team members for a monumental year at Optoro.  We look forward to making an even greater impact in our world in 2024.

Table of Contents

Optoro’s Values, Mission, and Vision

Our Values

The State of Returns 2023

Returns continue to be a conundrum for retailers and third-party logistics (3PL) providers to solve. In fact, in the last three years, returns jumped to a top five priority for retailers. Similarly, a study by Zebra found that returns management climbed to the top operational challenge for nearly half of warehouse decision-makers.

Adding complexity to the challenge — Gartner found that 97% of retailers do not have an identified executive owner responsible for reducing returns¹. Perhaps even worse, tracking reliable metrics for returns can be cumbersome without the right technology. (And what you don’t measure, you can’t fix!)

The average return rate for ecommerce sales was 17.6% in North America (up slightly from 2022), while the total return rate (brick-and-mortar plus ecommerce) leveled off at 14.5%. And while store returns have a lower rate of ~10%, almost half are buy online return in store (BORIS), making it difficult for retailers to parse through and resell cross-channel inventory. In total, there was $743 billion in returned merchandise — posing a continued threat to both retailer’s profitability and the circular economy.

There are several trends in the retail space that are top of mind for retailers and brands:

There’s a steady focus on returns avoidance

With an increased focus on returns, more retailers are taking action to reduce the overall numbers of returns. We’ve seen retailers add shipping costs for returns, impose restocking fees, shorten return windows, and improve product data to help consumers make better purchasing decisions. However, while these actions may reduce some returns, some of them can (and statistically will) impede some shoppers from purchasing from retailers. In fact, Optoro’s Returns Unwrapped survey in November 2023 found that 64% of shoppers admit they’ve bought from one retailer over another purely because it had a better return policy. The focus on a holistic returns strategy, not just avoidance, is more important than ever.

Increased interest in automated, machine learning, and AI-driven returns solutions

Reverse logistics is often “behind the curve” compared to outbound, forward logistics. Unfortunately, many retailers and 3PLs have outmoded manual processes for returns, resulting in slow time to restock, backlogs, and high-touch manual processes. Coupled with the tight labor market, savvy brands are looking for technology solutions with prebuilt workflows, modern architecture and integrations, and even robotics APIs to operate reverse logistics at the same efficiency and productivity levels as outbound fulfillment.

Returns fraud and abuse is a growing concern

In Optoro’s 2023 Returns Unwrapped Shopper Survey, we found that as high as 30% of shoppers admitted to wardrobing, and that shoppers between the ages of 18-29 are more likely to wardrobe.

As more shoppers become increasingly savvy with ecommerce buying, the percentage of returns fraud is growing as well. In fact, 13.7% of returns in 2023 were estimated to be fraudulent (up 3.3.% from 2022). Wardrobing, or the return of used, non-defective merchandise was the biggest percentage of fraud for retailers amounting to ~49% according to NRF.

Our Technology

For most companies, the returns workflow is supported by numerous technology applications painstakingly strung together through integrations, APIs, and sometimes manual transfer of information. As the returns challenge itself becomes more complex, we know the technology supporting the process shouldn’t add to the challenge.

With the growing complexity of returns and the lack of solutions that solve the entire equation like we do, we spearheaded a repositioning of our product in 2023 to a returns management system (RMS) — a technology platform that spans the entire returns lifecycle — from return initiation, return methods, shipping consolidation, dispositioning, and ultimately restock and resale.

In our 15+ years of experience solving the returns dilemma for the biggest brands and retailers, now more than ever, we believe that the only way to truly make a difference is to understand the entire returns lifecycle and connect data throughout for a holistic view.

Optoro’s RMS manages the workflow of the returns lifecycle with three modules with Smart Dispositioning at its core:

Customer Impact

One of our core values at Optoro is to make an impact and one of the key ways we do that is by helping our retail & 3PL customers experience positive change in their business through our technology.

In 2023, Optoro customers were not only able to reduce costs and operational waste, but also retain more revenue from returned inventory — driving higher profitability and a better returns experience.

Customer Spotlight

A leading multi-brand retailer unlocked a net-new revenue channel and boosted their recovery by +35%

A national multi-brand retailer was forced to recycle/destroy all returned baby gear, such as strollers, car seats, and high chairs, due to stringent domestic resale and safety regulations. In addition to creating waste, this resulted in 0% financial recovery of non-defective inventory. 

They needed a software solution to help them identify resalable items for higher margins while remaining compliant. Optoro’s software helped them intelligently disposition non-defective inventory to a baby gear-focused resale market, creating a net-new revenue stream while also diverting nearly new and easily resealable products from landfills.

Optoro’s RMS enabled:

Environmental Impact

Community Impact

Volunteering

As a mission-driven organization, service is core to Optoro’s values. This year, three individuals gave more of their time as volunteers in their communities.

Optoro also values giving our employees time for volunteering. In the past year, Optorians spent 420 hours volunteering in our communities at more than 33 organizations across the U.S.

Donations

Optoro’s technology facilitated the donation of $12.6M worth of goods to charity organizations in 2023.

Our People Impact

Employee Recognition

The Opties

Optoro hosted its 10th Annual Optie Awards to recognize employees who have gone above and beyond to deliver exceptional results that positively impacted Optoro throughout 2023, and whose actions align with our Company values. We are honored to share the 2023 Opties Winners.

The Lumies

In Q3 2023, Optoro launched a new peer-nominated recognition program called the Luminary Awards (Lumies for short). This award is given once a quarter to one or multiple employees whose actions or achievements exemplify our values.

One of our core values at Optoro is to shed more light than heat, and a luminary is a light-giver, a person who inspires or influences others.

Innovation Impact

Demo dAI

On October 20th, Optorians embarked on a day of innovation and collaboration exploring the myriad uses of generative AI, turning our headquarters into an innovation playground! It was a day filled with enthusiasm, collaboration, and a dash of technological magic, all centered around the endless possibilities of generative AI and how it can supercharge Optoro. 

The day kicked off with presentations by project leaders who introduced their innovative ideas, and then the team divided into groups, each set to conquer a unique challenge. Here’s a glimpse of the high-octane action:

As the day unfolded, employees hopped from group to group, injecting fresh ideas and inspiration into each project. At the end of the day, Optorians reconvened to share their learnings, challenges, and successes. Some teams showcased their fantastic progress, while others identified obvious factual errors with the information given to them by AI!

This day of exploration and collaboration is a reflection of Optoro’s dedication to pushing the limits with technology to bring greater value to our customers. The future is promising, and by embracing AI, we’re well-equipped to capture the endless possibilities that lie ahead.

“The day made it clear that we need to think more carefully about this. AI is interesting but we need to think about how it adds value to our products, processes, and/or workflows. In many cases, we reinforced what we already know: the tech is interesting but still requires a lot of human insights and context.”

“Overall, a great time and use of resources — I believe that we need to understand how to leverage AI to stay at the forefront of our industry.”

Employee Resource Groups

DEI Committee

The Diversity, Equity, and Inclusion (DEI) Committee is a group of diverse individuals committed to making Optoro a more inclusive organization. The volunteer-led committee underwent a transformative journey to create a resilient committee whose impact can be felt across the organization. Our 2023 strategy focused on three key areas: Learning & Development, Celebration & Recognition, and Talent & Retention.

Creating engagement opportunities to foster a more connected, inclusive workplace. 

Celebrating and recognizing cultures, holidays, and people

The committee created a company-wide DEI calendar to bring awareness to people and celebrations all around the world and they organized holiday events to embrace the richness of different traditions and cultures. Some of these events included:

The Committee is excited to continue to grow their efforts and impact in 2024!

Women’s Group

The Women’s Group’s mission is to provide the women at Optoro with the tools and resources necessary for building successful careers. They achieved remarkable success in 2023 through a multifaceted approach that built on their 2022 focus areas of engagement, empowerment, and education.

Engagement

The Group hosted numerous engagement opportunities that brought women from across the organization together. The Summer Clothing Swap enabled women to trade threads and make bonds with each other. The event not only embodied Optoro’s commitment to sustainability but also demonstrated social responsibility by donating remaining items to Goodwill. Further, the establishment of a monthly women’s group BYOLunch further contributed to building a strong sense of community and encouragement within the office.

Empowerment

Collaborating with T&C, the group successfully expanded the mentorship program, opening up mentorship opportunities to all employees, which has fostered a supportive environment for professional growth across the organization Further, a very impactful event included a highly attended fireside chat with Amena Ali, CEO, receiving positive feedback for its intimate and inspiring nature. Women left this discussion with tools and tips about how to make strategic career decisions.

Education

A large 2023 focus area for the Group was personal financial education providing women with the knowledge and skills to make informed financial decisions that will help lead to wealth accumulation and reduced stress when it comes to financial planning. The Personal Finance Series, featuring distinguished speakers like Nancy Hiliker, Vice President at Revolution Growth, and Dominique Reese, a Financial Wellness Coach with OneVillage, shared valuable insights into investment strategies, financial planning, and the importance of mindset in managing money.

Overall, the Women’s Group made a significant impact on professional development, financial literacy, and workplace camaraderie throughout the year.