Affirm, the buy now, pay later option for consumers, will shut down its Returnly business and has entered into a partnership with Loop Returns, another returns management solution.
“Loop will now be the preferred returns provider for merchants who are currently using Returnly,” Wayne Pommen, Affirm’s chief revenue officer, said in a statement Thursday.
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Affirm did not specify the terms of its deal with Loop, though a source familiar with the matter told WWD, “This was an all-equity deal, with Affirm receiving equity in Loop.”
The $1.5 billion, publicly held, San Francisco-based Affirm purchased Returnly in 2021 in a cash and equity deal valued at about $300 million. Returnly will be shut down by early October.
Affirm is a service enabling consumers to choose a payment schedule and know upfront the total amount that needs to be paid, so there are no surprises with fees or hidden costs later. Affirm says it doesn’t charge late fees or penalties, and offers options that are interest free or simple interest charges that do not compound. A range of term-length options for monthly payments are offered, as are biweekly options. Affirm is considered an alternative to credit cards.
Switching returns platforms reflects the company’s effort to return to profitability and boost its stock which has been trading around $15 lately, from its 52-week high of more than $40. While showing revenue growth, getting additional merchants to offer its payment service and adding tools for consumers, the company has been reporting operating losses this year.
With Thursday morning’s announcement regarding Loop, as well as an earlier Piper Sandler downgrade of Affirm to underweight from neutral, the stock price was down about $2, or 13.8 percent, to around $13.26.
The switchover also reflects greater efforts to encourage consumers when making a return to take a credit for a future purchase rather than get their money back, and to reduce the hassles of making a return.
“This partnership with Loop and the divestiture of the Returnly business will allow Affirm to take an even deeper focus on driving strong growth and profitability in our core business, serving our merchant and platform partners with world-class payments and technology solutions, accelerating our direct-to-consumer offerings, and building on our deep capabilities in underwriting and decisioning,” Pommen said.
“Since 2017, Loop has helped more than 2,200 merchants, including top brands on Shopify, increase customer loyalty, retain up to 50 percent more revenue on returns, and reduce refunds by up to 30 percent,” Pommen added. “They also share our commitment to best-in-class product and consumer experiences, making this a natural fit. Starting today, we will work hand-in-hand with Loop to ensure all Returnly merchants have a smooth and efficient transition, prior to sunsetting the platform by early October.”
Loop’s chief executive officer Jonathan Poma wrote in a blog post: “Today marks a big day for Loop and an even bigger day for the return management ecosystem.…More than 2,200 merchants have relied on Loop to create deeper connections with their customers, reduce refunds and deliver meaningful cost savings.”
Poma said merchants moving from Returnly to Loop “will be joining brands such as Princess Polly, Allbirds and Tecovas who continue to trust Loop to manage their returns. Joining Loop’s platform will positively impact your business by delivering meaningful cost savings — from reducing refunds to optimizing your reverse logistics processes.”
Asked what advantages Loop has over Returnly, and how Loop makes it easier for shoppers to return products, Pommen, via email, contended that the service increases customer loyalty, retains up to 50 percent more revenue on returns, and reduces refunds by up to 30 percent. “They offer unique features like automated shopper flows, which help customers reduce friction from returns, and in turn, help merchants increase customer loyalty and retain revenue.”
He also noted that Loop allows merchants to offer in-store returns and works with many carriers. Merchants are also able to offer printerless and boxless drop offs at more than 9,000 Happy Returns locations around the country, as well as at-home pickups in eligible major metro areas by Veho, a last-mile logistics service.
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