Packages ride on a conveyor belt during Cyber Monday at an Amazon fulfillment center on December 2, 2024 in Orlando, Florida.
The company has just closed a $12 million seed financing, led by venture firm Felicis, with participation from Amazon's $1 billion Industrial Innovation Fund and other investors.
Cambridge Terahertz, a Sunnyvale, California-based startup, has developed a 3D imaging system that can see inside unopened packages, enabling retailers to more easily and quickly spot cases of return fraud.
It's become a costly nuisance for retailers, accounting for $103 billion in losses last year, according to Appriss Retail.
Retailers of all sizes have in recent years struggled with an uptick in fraudulent returns . The scam involves shoppers requesting a refund, but instead of returning the merchandise, they keep the item and send back an empty package or a box of unrelated junk.
Amazon is turning to the startup world to find a potential fix for one of its thorniest logistics problems.
"Amazon handles a lot of boxes, as you can imagine," Nathan Monroe, CEO of Cambridge Terahertz, said in an interview. "It's a big problem just knowing what's inside boxes, knowing how efficiently they're packed, knowing if what you've returned to them is what you said it is."
Amazon launched the Industrial Innovation Fund in 2022 with a goal of investing in businesses working on technology solutions that could apply to the company's massive and complex operations network, from the middle mile to the last-mile portion of the delivery process.
Franziska Bossart, head of the fund, said in an interview that Amazon will typically plan to pursue a deeper "commercial relationship" with portfolio companies over time, ranging from piloting the technology to a potential acquisition.
Cambridge's technology "aligns well with Amazon's needs" and can have a real impact on its ability to screen inventory for damages and defects once it's returned or before a package leaves the warehouse.
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