What To Do With Open Box Returns On Shopify — Brad Sorock | How Drip Pricing Drives Sales, Why Returns Vary By Industry, Why Open Box Returns Boost Efficiency

What To Do With Open Box Returns On Shopify — Brad Sorock | How Drip Pricing Drives Sales, Why Returns Vary By Industry, Why Open Box Returns Boost Efficiency, Speaker 2: This episode is sponsored by Ahrefs, the all-in-one marketing intelligence platform trusted by SEO professionals, content creators, and digital marketers around the world. Whether you're doing keyword research, checking backlinks, or analyzing competitors, Ahrefs gives you the tools to make smarter marketing decisions. Explore what Ahrefs can do at Ahrefs.com. Speaker 1: I realized soon after, as I closed the business, I started to visualize, all right, if I'm going to be Brad 2.0, what do I want in my life? What's next in this life? And what are my intentions in this life? What do I want it to look like? Speaker 2: Hello and welcome to another episode of the Ecommerce Coffee Break podcast. In today's episode, we want to discuss what you can do with open box returns. Now, this is a problem for a lot of Shopify merchants out there, and I have a genius solution that I want to introduce you to today. This is done by Brad Sorock. He's an ecommerce veteran who has been in the industry since 1999, going from solo ventures to building a 20 million business with 85 employees. Featured in Traction as a visionary in niche retail, Brad now tackles global returns challenge with his Shopify app. So we want to dive into this and I would like to welcome him to the show. Hi, Brad. How are you today? Speaker 1: Hi. Great, Claus. Thanks for having me. Speaker 2: Brad, you have been in ecommerce for a very, very long time. Tell me a little bit about your journey and how did you end up creating a Shopify app? Speaker 1: So, yeah, right, it is old. It started in 1999 and I started, we didn't, at the time, Shopify, of course, didn't exist and I was in retail and out in a small ski town out in Colorado and I was out riding my bike one day and we were trying to figure out, I was doing telemarktski.com, which was great. Most people don't even know what telemarktskiing is, but it was a very small niche industry. But I was riding my bike one day and I had a watch on, an altimeter watch, and I was like, what if I just did altimeter watches? And people at the time were trying to be everything to everybody.com, petsoutdoors.com or pets.com, planetoutdoors.com, all these different ones, and babymall.com. Well, I thought if I did just watches, and then I thought, what if I just did the brand of watch? And I did SuuntoWatches.com. I went home and I called Suunto and they said, oh, we've heard of the internet. This is a great path. Luck and timing sort of maybe played into this but and they let me do it. So I started with SoomtoWatches.com and my son was being born and I was looking at strollers and I thought what if I went to BabyMall.com and it was horrible and I thought what if I just did JoggingStroller.com so I called up the I figured out how to buy that site for about a thousand bucks or that domain excuse me and so I Then, the first year, we did $175,000 in sales. And the next year, I kept going with these niches. And the next year, I did $2 million. And the next year, we did $6 million. And the next year, we did $10 million. It just kept going and going. And of course, the warehouse piece of it all was I want to control everything. Well, it seemed like at the time, like if I could dropship everything, that's the perfect world. Dropship, they ship it. But then there was like returns coming. And where do they go? Do they go back to them? I went from my closet to my garage to my partner's garage to a small warehouse to a bigger warehouse to about 80,000 square feet is where we ended up. So, that one grew, as you just said in the intro, we grew to about $20 million in sales. By 2009 or 10, things started to slump. Amazon, who was only selling books, was then selling everything, competing with me on price, doing free two-day. We couldn't keep up and hold on. And there was about, I had actually written down about 13 reasons why that we had to close the business. And we closed that business and it was a dramatic time in my life. Nobody teaches in business school how to close a $20 million business. I mean, it was really a challenging time of life. But I learned and I thought, what am I even trained to do? Am I employable? I'm just a visionary. I had a great business idea. And I realized soon after, as I closed the business, I started to visualize, all right, if I'm going to be Brad 2.0, what do I want in my life? What's next in this life? And what are my intentions in this life? What do I want it to look like? And I thought at the time I had all these employees and staff and big warehouse and all that stress that comes along with it and the rewards. I did love the pieces of owning a company like that. But I realized that my kids were young. I said I want to be at home. I want to be able to work from anywhere and it sounds silly right now. 15 years later, but my model was any beach anywhere. I want to be able to grow a business where everything's in the cloud. It went as far as like, so every decision I made was going to be, I can do this from anywhere. I had a third party, I'll have a third party warehouse, so I won't have my own employees. I will have somebody checking my mail and scanning them up to PDF. But of course, since COVID, now that's sort of normal play. But at the time, it was pretty different and cutting edge and wasn't all possible. But one of the problems that we had with this whole thing was returns. We had a massive, I wouldn't say it's the same as everyone. We just had a big returns problem. We get things back, say the jogging stroller site. Okay, well, we did 25,000 jogging strollers a year. Well, at a 3% return rate, which is really low at the time because the returns weren't as easy as they are now and sort of the norm, but even at 3%, that's 750 strollers coming back a year, of which maybe a third could get put back on the shelf. So now we're sitting with 500 strollers. What do we do with them? We can eBay and Craigslist. We can have a warehouse sale, but that only goes so far. At the time, we created our own website, which was returnsforsale.com. We put them up on there and then they would drip in price until they sold. Okay, obviously, as I said, that business closed, and then came the Shopify ecosystem, which is really like anybody, anybody can just, if you have no experience, can create a website. That's what's beautiful about Shopify. And that made the barrier entry much lower, but then, of course, the becoming unique and such was really hard to do, and everyone's doing it. So, I found my niche and I just thought, well, what if I created what we had going for it as a Shopify app, as that app ecosystem grew. And so, I was holding on to that and I have a couple of e-commerce websites that I still run that I really enjoy. But then this became a passion of, and also as a kind of an eco-conscious type of person, I felt like, Well, this is something I can give back and I wound up joining actually later in this career. I joined 1% for the planet so I wanted to make that eco part but also just helping businesses and that's part of my own DNA is helping others. And so, that's how it eventually evolved and I've created this app, returnsforsale.com. And the beauty of it is, it is completely unique. Nobody else is doing this. And the downfall is that it's completely unique and nobody knows it exists. Hopefully, with this podcast, other users will see what it's about. Speaker 2: What I like about it is that you went through the trenches of selling online for many, many years and really felt the pain with returns and how difficult it is to deal with them. This is a service, as you said, that everyone needs to offer to their customers. Just depending on the business, there are a relatively high number of returns. I've been in this situation myself years ago. I did not know where to put the returns because same lifestyle, being location-independent, which I think a lot of our listeners is one of their driving forces, why they're on Shopify, why they want to start an ecommerce business, is being location-independent, having a business in the cloud, and now dealing with all these returns, which is a pain in the neck. Now, I think the solution that you came up with is – and you said there is no other – is genius. I would have loved to have that years ago. I think it's absolutely genius. I had a look at it, and I strongly recommend our listeners, after the podcast, go and check it out yourself. It will make your life so much easier. Now, talk us through the different features. How does it work, and how does it help Emergent? Speaker 1: So, well, one thing that I was going for was we need to make it easy for customers or clients or Shopify users to post this. And I like to say make it easy for the vendors and the customers have equal merit when I'm developing this app. And by that I mean I'm thinking have to think in the terms of make this easy for the vendors, the Shopify owners, and I need to make this real clear and easy and desirable for the end user, the customers. So there was two mindsets there. I read once that Jeff Bezos had an empty seat at the His board table for the customer. Well, I always felt that Jeff Bezos should have had an empty seat for the third-party seller at the table. And I think he really missed out on that. I think those people had been pretty abused by the whole thing and the margins being taken and such. And even, by the way, their returns, because I also sell on Amazon. And Amazon sends returns and you get to choose, do they want to dispose it? You get it sent back, then you've got this open box return. And it's really abused on Amazon. But so along those lines, I was thinking of, so the process is, so I tie it in with Shopify. So when you go to my app, which was built in within Shopify, and we then choose from a drop-down menu of the product, your products, it ties right into your products. They choose the product, and then you get to say, all right, how many do I have? You rate it, A, B, C, D, E, and then you describe it. You get to choose which images, and what we're essentially doing is creating a new page. Which somebody could probably do on their own. No, they for sure could do it on their own. It would just take a whole lot more time and wouldn't have the sophistication that we have with this. But so we tie into that to their Shopify site. They choose their product. We take their product and we rate it and we do a quantity. So we rate it A, B, C, D or E. They get to describe it and then they get to choose which images are going to come over to the new page and then they get to add images. The idea being we put a little widget on their website that says, okay, normally this pair of shoes was $100, but now these shoes are $80 and you want to know exactly what's wrong with them. Maybe they were just worn once, the box is missing and they got a little scuff on them and they send them back. Now it's at $80 and you can opt to put it at $80 or you can have it drip at 1% a day or whatever percent you want, even 0.1% a day until it actually sells. And so, we're letting the market find the price and we're making it very easy and that little widget shows up on their website. It also, they click on that, it goes to a new page that we've created that has the right images of the old product, maybe in that particular color and we have any damages so that they can see exactly what they're getting when they're buying a new product. You can also adjust, say, your return policy. Maybe you don't want to take returns on returns, so all sales are final. Or maybe a condition is allowed returns. We let you adjust that. And then also, as a Shopify owner, you can appreciate, once it sells, it wipes out from the backend. So you don't have to go and delete it. Actually, it archives for about 40 days. The reason we did that is some customers have returned software that are looking for the return. So we archive it for 40 days, and then it completely deletes. So we try to make it really clean on the backend. As a Shopify owner, I was able to take my knowledge from using Shopify since 2011 of all the things that they have to take into consideration and then just being a shopper myself of what do I have to take into consideration as a consumer. I want to know exactly what I'm getting if I'm buying returns. Some people won't buy returns. If you're buying a baby shower gift, you're not going to send a returned item. But if you're just looking for a discount, you don't care that it's got a few scuffs, I'm going to wear the shoes anyways, well then many people will take that opportunity. Speaker 2: Let's take a moment to thank Ahrefs for their free web analytics tool, a free privacy-first analytics platform. It gives you a clear picture of your website activity, doesn't use cookies, and won't weight down your pages. It's incredible fast, easy to set up, and built by the same team behind one of the most trusted SEO tools in the world. Best of all, it's completely free and included in Ahrefs' webmaster tools plan. Head over to ahrefs.com slash awt to sign up. You will find the link also in the show notes. As I said, I think it's a genius solution, and also it shows already for me that there's a lot of force in there. I like this drip process, and we can talk a little bit more about that because I think that's very, very unique, and specifically for people or for merchants that really want to sell this over time but don't have time pressure on it. So you just leave it there, and then at some point, the price will match. How did you come up with the idea, and how do you maintain this? Speaker 1: So, that's a good question. I don't remember how I actually came up with the idea, but it seemed like a great idea at the time. I mean, certainly eBay is, you know, you can increase your bid. I just thought, well, this is like, where do we price this? What do we put it at? That pair of shoes, we start at $90. It's only been used once. Maybe it just needs 5% off. And then it came to, well, why don't we let the market find the price? And of course, if you don't get a lot, if it's an obscure item, you don't get a lot of traffic on it, you probably won't want to let it just continually drip because it could, we actually have one where you could set it or you can set these to whatever you want, but you could set a floor on it. So I want to stop my losses at 50% or whatever. So, yeah, so that was just it. Like, let the market find the price. But some people, they have massive traffic. They know it'll sell. Let's just put it at 10% off. Eventually, they'll sell. And one thing that I made really cool that I came up with was, say you've got six products that are used that you're selling of the same product, and you're letting it drip in price, and you're going to let that go down to maybe even down to 30% of its value. Well, the idea was, say you started at 90%, it drips down to 80, then it's at 70%, somebody buys it, one of them, but there's still five left, and then it can go down to 60, 50, 40. Well, I just thought, well, then somebody's going to call and be like, well, wait a minute, now that price is at 50% off, I bought it at 30% off, so what we did is we made it, once it sells, it jumps back up to that original offering at, say, 10% off. And it was just one way, same thing, of just being, thinking in the mindset of a Shopify owner of how is this best going to work. So it's been really fun and successful and I didn't, I of course was thinking in my own realm, but I was, I started to learn of some of my customers, an example being I got real fortunate with a, I ran into a guy who has a Shopify store, owns a automotive store. And I said, what are you doing with your returns? He's like, Oh man, Brad, it is a massive problem. We're sitting on half a warehouse of returns. People try to buy a muffler. They started in there, install it. They start it. They don't like the way it sounds and they send it back. And now I can't sell it as new and it's missing a few bolts. And I told them about my solutions. I go, we'll give it a try. This is like a 30 to $50 million company. And sure enough, they tried it and they loved it. And then I started to get some other competitors calling like, what is this thing on there? Your returns for sale, like what is this thing? And so, and that was able to spread. But then there was things like even I had a lot of success with a wig company. I never would have thought, but they said the same thing. They're dropshipping their wigs. They dropship all their wigs, but they can't send the wigs back to the manufacturer, so they have to take them in-house. Not only that, people are buying three, four, five wigs at a time because they want to try them on. And so they would just take them in-house, they use our app, and it worked out great. Speaker 2: Awesome. I want to talk a little bit about the maintaining in the warehouse, basically the day-to-day work to get the data into the system. How does that work? Speaker 1: Right, that's a really good question. And the success of the app has to do with the process. Sure, a mom-and-pop store, you get your Amazon returns, you put them in your office, you just list them right from there. It's real easy. But a warehouse, for example, that automotive company, Well, they actually had a few different warehouses in different locations and so we made it so that, well, first off, you can choose the location of where that warehouse, which warehouse you're choosing and you can even choose some companies have a different theme they're using for a returns page because a lot of people will categorize these on their Shopify app or Shopify store so that it says, yes, it's on that page, that new product page, but it's also in a category of sale items or what have you. And so it is to your point of the process of setting it up. So generally, like in our warehouse, we would have products would come back, it gets inspected. Can it go back on the shelf? Yes, great. It's going to go back on the shelf. It goes in that pile for somebody to restore it, restock it. And so the next one is, all right, this one is damaged. And then somebody has to actually take some pictures of the damage and they have to assess it. And in a perfect world of what I've seen some of these bigger Shopify plus sites that use our site, what they do is they have a process in place where Maybe it goes on to a spreadsheet of this. We got this return. It's in this condition. Here's a couple pictures of it. And then marketing will repost it. It just sort of depends on the business you're in or how that communication happens. And then it goes into a pile. And we have the ability where you can also adjust the SKU. So, it gets labeled with a SKU and it gets put in a bin so that they know where it is. And then when it's sold, they see that SKU that's sold. You can also rename it. You give it a new URL. So yeah, the success of the app comes down to how well your process is, and it's different for every company. Speaker 2: Now, I'm a marketing guy, and I like the approach that you can use this actually in plenty of ways that have come to mind now in your marketing. You can bring back people who haven't bought in the first place. You can do some kind of gamification with that because of the drip process. So I think there is a lot of synergies in there to not get only rid of a problem of returns, but also use them to increase your revenue with more marketing on that side. Now, you gave a couple of examples on businesses. Is there any kind of specific niche or industry where you see that works the best? Speaker 1: There are certain industries where returns aren't necessarily working. Sex toys. You can't return a sex toy. Clothing. Generally, clothing gets put back on the shelf. However, sometimes it smells like maybe smoke. Somebody wore a dress out to a cocktail party once and then returned it. There's so much return fraud. Even in our jogging store business, we would sometimes We weren't watching everyone but you know sometimes a stroller would be sent down to a hotel in Orlando. They used it for Disney World and then they sent it back and now it's got City Cup stains. I mean there's just return fraud all over the place. Yeah, so is there a particular industry? I mean, there's automotive. Furniture's been successful. I had one. I had no idea that air conditioning units. We have a company that sells those for windows that came back. Shoes is a real obvious one, and I've really made some customization on shoes so that you – because shoes, you have multiple variants, right? You're looking at a page, but you've got maybe four colors in 13 different sizes, and so the app can have many listed. Well, when you highlight size six and a half in red of this shoe, it goes to the top of the widget. Electronics has been good. Sporting goods, one of the biggest lacrosse dealers in the country, uses our site. Pet sites is great because pets have hair on it and what have you. Even a game store out of the UK has been using us. Sometimes they have damaged corners or damaged things get dropped. We've got kitchen, we've got a knives company, as I said wigs. It's more of like a question of if you have open box returns that can't be sold as new, you're going to find use of our app. There's obvious ones where they don't resell returns, but other than that, it works. And I will say just on your point last, one of my real sticklers was, that it takes less than a minute to post. Once you have the photo of it and you know the description, it takes, that was a big thing in our Shopify app. It really, it ties into Shopify. In fact, something at some point we could talk about is, I am going for this, what they now call built for Shopify, if you're familiar. I think there's roughly 12,000 Shopify apps out there right now. It's just a growing system there, but there's only, I think there's maybe 700, roughly, give or take, 700 built for Shopify apps, and I'm going for that. And part of it is it's really hard to get because Shopify is really stringent. Maybe it wasn't so much at the very beginning because they were starting the program, but now they make it where it has to look like it's integrated into Shopify and it is integrated to Shopify and it passes all these speed tests and it's got to be there. And to this day when we're filming this or recording this, I have not achieved it, but we've gone back maybe four or five times. We're getting really close and it's cost It's a lot of money and it's a lot of time and investment. It's really fun because I love improving, but that's part of what I'm trying to present is, hey, I want to be built for Shopify. You get this badge and it means something. Speaker 2: It makes perfect sense. I think your solution is so unique to the markets that there's a good chance that you will get this back. Now, I want to talk a little bit about the onboarding process. How does that look like? How long does it take? Speaker 1: So, once you load it in, nowadays with Shopify, they make it pretty easy. There's really not much to it. It's really just figuring out your process. We tie right away, right into your whole Shopify system. So, I also, I mean, my obsession is customer service. And so I try to reach out to everyone who joins and say, hey, I'm here to give you a demo call. I'm here to walk you through it. I give my actual cell phone number, my text, my WhatsApp, my email, and it goes right to me. That's my, it's what I love. Even when I had 85 employees, my favorite part about it was customer service and helping people out. So I continue on that. My obsession is It's one of my core values is my customer service obsession. So if there is ever any issues or questions or suggestions, I reach out. That said, so much of when people sign up for Shopify, the real person who's doing it, it's almost like a fake email or what have you. They don't all get my message. So I really don't do that that often, but I love when people do take me up on it and they should know that they can do that just listening here. Speaker 2: Tell me a little bit about your pricing structure. How do you charge for the app? Speaker 1: So, we do it as it's – there's no chart. We don't do a monthly fee because I felt like I never liked those. If you're not using it, you're not paying. Right now, we do a – we take 5% of the sale on those sales and only those sales. And on Shopify, that comes out of your Shopify fees at the end. They take their percentage from me and what have you. But yeah, that's how it works. Speaker 2: Yeah. And again, I think there's so much potential there to make additional revenue and save you a lot of headaches with dealing all of these. So it's definitely worth it. Before our coffee break comes to an end today, is there anything that you want to share with our listeners that we haven't covered yet? Speaker 1: No, I just appreciate you having me. I really do. I'd like to get my weakness out there. My strength is building this great thing and my obsession with customer service and my innovation and keep building on it. And I love that part. My weakest part is marketing. I haven't taken money home from this app. I've been at it for about five or six years, but it's so much fun and I love building and making it better. It's to the benefit of everyone else. And, but my marketing, I'm not doing a great job at it. At some point, I do need to switch my focus. I'm not even, honestly, I'm not even on social media. It's just not my way of life. But, yeah, it's, the app is being used. I'm really proud to say it's been, we've sold, oh, I don't know the exact number offhand, but it's close to 4,000 returns that have gone through the app. So, it's very exciting and I feel really proud of what we built. So, I think that those using it, if you have open box returns, it's a really great solution. So, yeah, there's nothing else to add on that. Speaker 2: I think for our listeners, check it out. It's really a golden nugget. You will be happy to see that because everyone has to deal with returns and it's so unique. It's definitely worth trying it out and I think it will add to your business. Where can people go and find you? Speaker 1: So, we are returnsforsale.com or you can just search in the Shopify store for open box returns. It's called Drip Returns for Sale. The drip is, of course, the dripping price in perpetuity. Speaker 2: Cool. I will put the links in the show notes and you just one click away and I hope a lot of people will reach out to you and check it out. Thanks so much for your time today. Speaker 1: All right. Thanks, Claus, for having me. Speaker 2: Thanks again to Ahrefs and Ahrefs Web Analytics for supporting the show. If you're looking for a clean, fast, and privacy-focused analytics tool, try it for free at ahrefs.com slash awt. That's A-H-R-E-F-S dot com slash A-W-T. You will also find the link in the show notes. Hey Claus here. Thank you for joining me on another episode of the Ecommerce Coffee Break podcast. Before you go, I'd like to ask two things from you. First, please help me with the algorithm so I can bring more impactful guests on the show. It will also make it easier for others to discover the podcast. Comment and subscribe in the app you're using to listen to the podcast and even better if you could leave a rating. And finally, sign up for our free newsletter and become a smarter online seller in just 5 minutes. 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