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We’ve all been there: You’re shopping online, amass a full cart, and check out.

You’re over budget, but chances are those jeans won’t fit right or that jacket will be too similar to the one you already own. At least one thing will end up in the return pile in your corner and make its way back to the seller.

E-commerce — with its ease of purchase and lack of trying on — has led to ballooning returns. About 20% of items purchased online are expected to be returned this year, according to an October report by the National Retail Federation.

Most of those returns are not relisted for sale. The costs — both in terms of time and labor — required to get products back online are often not worth it. Instead, items are loaded onto palettes to be sold to liquidators, shipped to other countries, or sent to a landfill.

“Where is it ending up? Nobody would talk to us about it. Brands wouldn’t talk to us, merchandising officers wouldn’t talk to us,” Adarsh Alphons, the cofounder and CEO of Postmoda, told Business Insider. “They wouldn’t acknowledge it as a problem.”

That’s because the answer isn’t good for business or the world at large. In 2023, apparel companies spent $25.1 billion in processing costs for returns, estimated a Coresight Research survey of 100 apparel retailers. That same year, more than 8 billion pounds of returns were sent to landfills, according to Optoro, a company specializing in returns solutions.

“They just think of it as the cost of doing business,” Alphons said.

He is hoping to solve that.

Postmoda, which launches to the public later this week, plans to offer luxury and designer returns — taking them off the hands of retailers, keeping them out of landfills, and offering them to shoppers at a discount.

This is Postmoda’s second form. The first, called Wardrobe, was a peer-to-peer apparel rental platform launched in 2021. Alphons raised $5.6 million over two funding rounds from investors such as Slow Ventures and Long Journey Ventures, he said.

But about a year after launch, he felt his business model, which used dry cleaners as middlemen, wasn’t scalable.

Alphons took a break to reassess the market and talk to stakeholders. Returns were a pain point — and they were becoming a bigger one.

“There was this huge slush that was growing because the return rates are so high because of e-commerce,” he said.

Alphons knew what he wanted to do — and after testing the theory by selling millions of returned items on Poshmark and eBay, he knew that it could work.

He just needed a little more money. He put together an eight-slide deck and went back to his original investors.

“They’re just so glad that I was able to find a business that is adjacent to our business and actually see revenue,” Alphons.

Existing investors, such as Opendoor cofounder JD Ross and Vine cofounder Rus Yusupov, hoped to capitalize on the growing number of returns and the increasingly popular secondhand luxury model. They invested an additional $200,000 in January 2023. Alphons said Postmoda has since been building tech and relationships with retailers.

Postmoda is far from the only early-stage company to attempt a pivot. Many successful businesses, such as Slack and YouTube, have achieved success by adapting their business models to meet market needs. The question is whether Postmoda can pull it off.

“Founding things usually has to do with persevering and staying at it,” Alphons said. “Overnight success is actually a very rare thing. It will be like five years, and then all of a sudden, you figure it out.”

Now that he has figured it out, he’s putting his foot on the gas. Next year, he plans on raising a Series A to scale up the marketplace and partnerships.

Here’s Postmoda’s pitch deck.