Santa Monica-based Happy Returns Inc., announced April 25 an $11 million investment led by PayPal Holdings Inc. that it will use to reach deeper into U.S. markets and expand its return services to international customers.

The deal will give Happy Returns greater access to the company’s 19 million merchants and in return, PayPal will gain an ownership stake in the 4-year-old start-up.

“The plan is to accelerate our growth,” said David Sobie, Happy Returns co-founder and chief executive. “Today, we have 350 locations, our plan is to get to 1,000 locations by the end of the year.”

Happy Returns provides return services for e-commerce retailers.

Customers can return products purchased online to brick-and-mortar stores, including Paper Source and some Sur La Table and Cost Plus World Market locations. Happy Returns issues a refund and then sorts the product for return to the company, donated or liquidated.

The company has contracts with about 25 online retailers, including Everlane Inc., UNTUCKit and Rothy’s. It claims to save those retailers about 20% to 30% on shipping costs.

The retail industry has been grappling with ecommerce returns, which tend to be higher than in-store purchases.

Amazon.com Inc. has a similar agreement with Kohls stores, which accepts some returns from the ecommerce giant.

Manufacturing, retail and trade reporter Rachel Uranga can be reached at [email protected] or (323) 549-5225 ext. 251. Follow her on Twitter @racheluranga

CORRECTION

An earlier version of this story, which ran online April 25, misstated PayPal’s contribution to Happy Returns’ latest $11 million funding round. PayPal led the round, it was not the sole investor.