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Shopify Buys Montreal Startup to Beef Up Return Game

Return Magic works with about 2,500 retailers, and most of that business stems from the Shopify ecosystem

Shopify announced Tuesday that they’re buying Montreal-based Return Magic, an application that aims to make returns as simple as possible for retailers.

The terms of the deal were not disclosed, but Louis Kearns, head of shipping services for Shopify, said that for the time being, Return Magic will continue to function as a stand-alone app in the Shopify app store.

Founded in 2016, Return Magic was aimed at simplifying the returns process, which involves a complicated mix of user experience, financial processing, inventory management, logistics and more.

Returns are an aspect of the online shopping boom that is vitally important for retailers to manage.

According to Return Magic, 41 per cent of customers say they buy more than one size of clothing with the intention of trying it on at home and returning the ones that don’t fit.

Moreover, Return Magic co-founder and CEO Guillaume Racine said that managing returns well can lead to repeat customers, whereas a bad experience can turn people off.

“Some people may think that a return means that a sale has gone wrong. Actually, that’s not always the case,” he said.

“Returns are kind of essential to the shopping journey.”

Return Magic is quite small, with just four employees including the company’s two co-founders. Racine said they currently work with nearly 2,500 retailers, and “99 per cent” of that business happens within the Shopify ecosystem, which caters to more than 600,000 merchants worldwide.

The sale represents another step for Shopify in its bid to position itself as the all-in-one command centre for retailers, providing e-commerce, inventory management, marketing and other services.

But aside from the services that Shopify provides directly, the company also has an app store that allows third-party developers to build and sell add-on services to fill niches.

Kearns said that the purchase of Return Magic represents a shift for the company, taking returns from an add-on to core aspect of the retail game.

“We feel really good about our ability to really go deep in this space, and provide native capabilities within the Shopify platform itself,” he said.

“By bringing in Guillaume and Raff and their team, we get an injection of that DNA and subject-matter expertise that will help us build the best native solution within Shopify.”

Earlier this year at Shopify’s annual developer conference, one of the main themes of the keynote presentation was about how the company is pushing beyond its roots as an e-commerce solution, and moving towards providing a truly comprehensive service by emphasizing new features for bricks-and-mortar retailers.

Kearns said that buying Return Magic is about the same thing, offering a truly comprehensive suite of services to fit retailers’ needs.

At the same time, though, Shopify’s success relies in part on the ability to preserve a vibrant, busy marketplace for third-party add-ons.

Atlee Clark, director of App and Partner Platform for Shopify, said that the company is constantly aware of managing the relationship with partners, including the software developers who populate the ecosystem.

“We talk about this all the time, because it is a fine balance and people are taking a chance building with us,” Clark said.

“Even if we acquire a company in this space, it doesn’t mean that we are now closing that part of the commerce experience to app developers.”

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