June 13 2011 01:38 PM

Internet retailers are keenly aware that an efficient returns program is a critical factor for maintaining customer loyalty. Quite often a customer’s first visit to an Internet retailer is the result of a search engine; however, that customer’s willingness to use the same store again is a direct result of their individual experience. While many stores have mastered the speedy execution and delivery, a bad returns experience can shut down a customer for good; enter the postal returns work-share model.

Newgistics, incorporated in 1999, was a pioneer in the work-share model with the USPS for return services. They, too, provide a hybrid label (they refer to theirs as ‘smart label technology’). In this return model, the customer uses the United States Postal Service for the initiation of the return. Put another way; they can return the merchandise the same way they would mail any parcel. And in a mirror of what occurs with the outbound shipments: the USPS then brings the parcel to one of Newgistics processing centers (they have at least a half dozen in the US). And Newgistics facilitates the final delivery of the return. 

Returns’ processing for consumers is a growing business, and Newgistics is currently the market leader among Internet Retailers taking advantage of the Parcel Return Service (PRS) program available through the United States Postal Service. UPS and FedEx both have introduced offerings in this space (and interestingly, Newgistics has recently used its network to provide competitive out-bound shipment services). The USPS facilitated returns service by UPS and FedEx are named UPS Returns Flexible Access and FedEx SmartPost returns, respectively. 

There are a variety of ways to process the return on the outbound side. Two of the most common methods are to place a 4” by 6” inch return label into the box as it is being packaged, or to provide the label at the bottom of a packing slip, as a 3” by 8” label image. The major difference between the two is that the first is all done at the time of packing and is a synchronous process, while the latter can be done as a separate batch as part of the pick-release process and asynchronous to the actual shipping of the parcel. There is no real pro or con to either; picking one over the other is more a function of how a warehouse is set up to operate. However, the ‘cut along the dotted line’ approach with the packing slip is generally less expensive than traditional label stock. With that said, neither of those options are my particular favorite. Recently, while talking to the director of transportation for GSI Commerce, Gerry McGowan, we discussed what we both agreed is a best practice for returns management.

As a best practice, we envision a returns website that brings up the customer’s order would facilitate the best experience for both the customer and the retailer. When a customer enters the return site, their order is automatically brought up on screen. The software asks what they want to return, and also prompts them with: Why? The customer is then given the option to either print the label or have it emailed to them for printing later. This agnostic approach allows the retailer to pick whatever returns service they want on the back-end, and it gives them instant visibility into what is being returned and why. It also provides a convenience for the customer by having options on how they receive the label.

The customer returns process has a direct impact on if your customer returns; a well-thought out process will delight the customer rather than frustrate them and bring them back to your store for future sales. The multiple offerings with the US Postal Service bode well for all of us, and should be considered a part of your carrier strategy.