- Online shoppers return 20-30% of purchased items. With each return, stores lose $21-46. Thus, the return problem has ballooned to a staggering $3 trillion.
- This startup has devised a simple scheme to reduce the number of returns. This scheme has a strong “network effect” because the value of such a platform will increase with the addition of each customer and store. Thanks to the network effect, a very large player can be created.
- But only if you manage to reach a critical mass of customers and stores, so that it continues to roll on its own like a snowball. Therefore, this scheme needs to be replicated right now to have a chance to become a monopoly in this market.
Project Essence
eComID believes it’s time for a new phase in the evolution of e-commerce—where the number of returns of purchased items can significantly decrease.
Returns of purchased items are a major problem for online stores, causing them to lose money.
With each return, an online store loses $21–46.
According to Shopify statistics, the average number of product returns in online stores ranges from 20% to 30% of the items sold. Moreover, during active advertising campaigns or seasonal sales, this percentage increases even further.
For 91% of stores, the growth rate of the percentage of returned items is even higher than the growth of their revenue. Thus, efforts aimed at increasing sales turn into efforts to increase losses ☹️
All this has led to product returns becoming a $3 trillion problem—this is the amount of purchased goods returned just last year.
eComID intends to “change the future of e-commerce” by creating a platform designed to reduce the number of product returns.
The startup launched its platform in November last year, but it currently operates on an invitation-only basis. However, eComID has already introduced itself to 1 million online store shoppers who became the platform’s first clients. The startup expects that 76% of them will return fewer items. Additionally, 7 out of 10 of these shoppers have shared their eComID experience with their friends.
eComID has currently raised its first €2.75 million in investments. The interest in their solution is confirmed by the presence of a venture arm from the well-known retailer H&M among the investors.
However, we cannot learn about how their platform works as the section of the website is only accessible via a code distributed by the startup to selected sellers. But we will now try to guess the essence of their solution 😉
What’s Interesting
The startup isn’t aiming to simplify the return process or reduce return costs for stores; instead, it wants to specifically decrease the number of returned items.
Online shopping has become convenient because items purchased can be easily and freely returned. As a result, customers have gotten used to buying a bunch of things, only to return unnecessary or unsuitable items without any hassle or expense.
eComID wants to change this habit—encouraging people to feel more responsible for their choices with each purchase.
To achieve this, they want to incentivize this sense of responsibility.
However, introducing such incentives will require changes at the e-commerce industry level—stores must begin collaborating with each other, facilitated by the eComID platform.
The abbreviation “ID” in the platform’s name suggests the emergence of a unique customer identifier.
The conclusion is obvious:
The startup wants customers to have an ID linked to their purchases and returns automatically, across the platform’s partner stores. And partner stores will be able to offer discounts or special bonuses to customers who make few returns across the entire network of partner stores. In essence, if a customer makes few returns, they’ll be able to buy cheaper, but if they make many returns, they’ll end up paying more. And the startup hopes that the desire to save money will help customers get used to buying only what they don’t intend to return.
Where to Run
The idea is interesting and makes sense. Conceptually, it’s similar to a discount card that works across a wide network of partner stores. The difference is that with regular discount clubs, the discount amount depends on how much they buy, whereas with eComID, it depends on how much they return 😉
A huge advantage of the eComID model is the presence of a “network effect,” because the platform’s value will increase with the addition of new customers and new stores.
However, there’s a catch—only 1–3 players will survive in each geographical market, those who can quickly gather a critical mass of customers and stores. After some time, it will become pointless to connect to other similar platforms.
The conclusion is simple—if this model seems attractive to someone, they should start creating and implementing it right now to have a chance to accumulate this critical mass. Otherwise, they might not make it in time.
About the Company
eComID
Website: ecomid.com
Latest Round: €2.75M, 04/04/2024
Total Investments: €2.75M, Rounds: 1