A Denver startup emerged from stealth Tuesday with the goal of improving the return process for e-commerce brands, helping companies to get stock back on shelves rather than in landfills.
Along with the unveiling of Two Boxes, co-founders Kyle Bertin and Evan Stalter announced they raised a $4.5 million seed round that they'll use to hire engineers and expand into new markets in North America.
Vinyl Capital led the round, and the Colorado venture firms Matchstick Ventures and Range Ventures also participated. Angel investors participating in the round included the CEOs of the shipping platform Flock Freight and the cowboy boot retailer Tecovas, among others. The startup's advisory board is made up of former executives of large e-commerce retailers like Amazon, Shopify and Rent the Runway.
"The company's technology solves issues of sustainability and velocity and will ultimately enable the first logistics network on the market for e-commerce returns," TJ Mahony, the founder of Vinyl Capital, said in a statement.
Bertin and Stalter founded Two Boxes last year after researching e-commerce returns and learning that the logistics were "unintelligent, time consuming and expensive," they said in a blog post.
"These inefficiencies cause customers to have poor returns experiences, brands to lose money, warehouses to overflow with returns and most importantly, our planet to be harmed with unnecessary inventory waste and return transportation emissions," the co-founders wrote.
According to a report from the National Retail Federation, the average retailer incurs $165 million in merchandise returns for every $1 billion in sales. Estimates from the returns technology platform Optoro show that up to 9.5 billion pounds of returns ended up in landfills in 2022. Tobin Moore, the CEO of Optoro, told Business Insider that processing an item and getting it back into a store's inventory costs retailers more than throwing it away.
With sustainability in mind, Bertin and Stalter developed a return-processing platform that integrates with e-commerce platforms like Shopify. It prioritizes returns, tracks return data and takes returned items through an inspection stage. The co-founders claim the platform shortens the time it takes for stores to get the items back in their inventories and helps prevent items from going in the trash.
The platform has been used by multiple e-commerce brands, Bertin and Stalter said. Steve Dilk, the COO of the athleisure company Vitality, said in a statement that the platform helps his company track returns and get data from the warehouse that it previously couldn't access.
"We're now getting our inventory back to stock faster, serving our customers better, collaborating more effectively with our [logistics provider] and improving our bottom line," Dilk said.
The Two Boxes platform also is sold directly to logistics providers. For those companies, it replaces "subjective and inconsistent" decisions about whether items should be disposed of, reduces manual data entry and tracks providers' incomes from returns processing, among other uses.
With the seed round, Bertin and Stalter plan to reach more brands and logistics providers. The startup is working to grow its team and was hiring a senior software engineer Tuesday. Two Boxes' staff is spread across the U.S., with core teams in California and Colorado. Bertin is based in Denver.
