Two Boxes, an AI-powered returns processing platform, has raised $3.2 million in a new funding round led by Assembly Ventures, as the company looks to tackle one of e-commerce’s most persistent pain points: returns and fraud.
The latest raise brings total funding to $13 million and will be used to expand the company’s product roadmap and deepen its push into enterprise customers, particularly across retail, direct-to-consumer and B2B segments.
Scaling AI in reverse logistics
Founded to modernize reverse logistics, Two Boxes said it is already processing nearly $1 billion in returned inventory annually across three continents, working with major logistics and fulfillment providers including Radial, Stord and Cart.com.
The company’s platform uses AI-driven tools such as image classification and anomaly detection to inspect returned goods, helping warehouse associates make faster, more consistent decisions on disposition — whether items can be restocked, repaired or flagged as fraudulent.
CEO Kyle Bertin said the surge in enterprise demand reflects a broader shift in how retailers view returns.
“Returns processing is a critical, often underserved function in modern logistics,” Bertin said in a news release, adding that the company is expanding beyond DTC into retail and B2B returns markets.
Fraud, defects and margin pressure collide
Returns have become a growing financial and operational burden for retailers, especially as e-commerce volumes rise. According to the company, U.S. return volumes have grown twice as fast as overall e-commerce since 2020, while returns-related fraud has increased at four times that pace.
The growth in volume is turning returns into what investors describe as a “margin battleground.”
Two Boxes’ platform is designed to address three core challenges:
- Reducing fraud: AI models flag suspicious returns and inconsistencies, helping prevent revenue leakage.
- Identifying manufacturing defects: Data collected during inspections can surface product quality issues upstream.
- Improving gross margins: Faster, more accurate processing enables retailers to restock sellable inventory sooner and reduce write-offs.
Two Boxes’ executives say these capabilities are especially valuable for 3PLs and large retailers managing high return volumes across distributed fulfillment networks.
Enterprise adoption and operational impact
At Radial, the platform has been integrated into fulfillment operations to streamline returns workflows and accelerate inventory recovery.
Shauna Bowen, Radial’s chief digital and transformation officer, said the technology helps improve efficiency while reducing waste and lost revenue.
“Two Boxes meaningfully improves operational efficiency across our network, gets more inventory back to stock faster, and helps our clients combat fraud,” Bowen said in a statement.
The company also noted strong growth in 2025, onboarding roughly two new 3PL customers per month and one new merchant per day.
Investors bet on AI-driven returns infrastructure
Assembly Ventures, which also participated in a prior funding round, led the latest investment, signaling continued confidence in the market opportunity.
Investor Sujoy Sarkar said returns are no longer a back-office function but a critical lever for profitability in modern supply chains.
“Retailers must process returns efficiently, reduce fraud, and protect margins simultaneously,” Sarkar said in a statement.
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