Sway (formerly Returnmates) announced a $20 million Series A funding round led by 7GC, with Jack Leeney joining the Board of Directors. Additional investors who participated in the round include Blackhorn Ventures alongside existing investors Lightshed Ventures and Rise of the Rest Revolution.
Throughout 2022, 7GC structured a thesis around analyzing e-commerce pain points and the “cause and effects” of COVID-19 and 2022 cost optimizations.
Reverse logistics – the sub-vertical that Returnmates is helping disrupt – is a problem that became increasingly visible to brands during the pandemic. The rapid rise of digital sales forced brands to enhance their omnichannel infrastructure to track their customers better. Subsequently, given the increase in interest rates and cost of capital in 2022, startups quickly had to optimize their cost structures. Optimizations forced many retail and e-commerce-focused businesses to look closer at their supply chain management.
Enter Sway. Sway is a Los Angeles-based B2B2C online marketplace and logistics company that provides leading consumer discretionary companies with next-day delivery and doorstep return solutions. It has developed its proprietary technology platform within logistics to optimize for brands on cost, speed, and overall experience. Due to a flexible 1099 workforce and drivers using their personal vehicles, Returnmates can offer rates 10-15% cheaper than UPS, with local distribution networks creating 99% on-time percentage rates. As an end customer for brands, this overall experience is far more delightful. With no more printing labels, repackaging, or waiting in line at the Post Office, you can process your return from the comfort of your home, driving NPS levels north of 70 for the company.
For B2B customers, there is a clear shift from atraditional ‘single carrier strategy’ (i.e., UPS, FedEx, or USPS only) to a diversified, multi-carrier approach (i.e., FedEx, Returnmates, RegionalCarriers, DHL, etc.). Unlike many of these incumbents, Returnmates wants to drive company synergies through cross-selling to marketing, transportation/ops, and finance teams (vs. just transportation teams). A formula that has proved fruitful in the past 12 months based on the onboarding of many Fortune 500 companies.
The funding comes following an incredible expansion of the business. Since August 2021, Sway has expanded to 20 cities, growing its team from 5 to 100. During the same period, it grew revenue by 14 times and increased its customer base seven times, including customers like Revolve, Zara, Nordstrom, and eBay.
Eric Wimer, who before founding Sway was one of the first employees at Uber, commented:
“Given the revenue and customer growth over the last couple of years, the capital was critical to expanding our infrastructure, technology and footprint to better support our brands, shoppers and driver partners.”
Deal related press:
TechCrunch: Returnmates, now Sway, bags $19.5M SeriesA to manage e-commerce returns
