Online Retailers Get Smart on Returns

Jan. 13, 2005 — -- How long did you stand in line to return an unwanted holiday gift or exchange a defective present?

Going back to a store to return merchandise can be a chore. But consider how much more difficult it is if you shop online or through mail-order catalogs. It could be days or weeks before an online retailer receives a returned item and issues a credit or refund to the consumer.

Such hassles are weighing heavily on the minds of consumers as they look toward the 'Net for their shopping fix.

According to a recent poll conducted by the Harris Interactive group, 85 percent of direct shoppers -- those who shop online and by mail order -- said they would not shop again with a particular retailer if they found the return process was not convenient.

"The return experience is the red-headed stepchild of the direct retail industry," says Jonathan Dampier, vice president of marketing for Newgistics, a "returns management" company in Austin, Texas. "Consumers want it done in an easy fashion, and that's where retailers are falling down."

Merchants are trying to address consumer concerns in several ways. An increasing number of direct retailers are footing the cost of return shipping, for example. But Newgistics wants to make sending merchandise back a real no-brainer.

The company has developed a system it calls Intelligent Returns Management to streamline the return process. At the heart of the system is software that produces special bar codes that Newgistics calls SmartLabels.

How it works seems fairly simple. After the software is installed on a retailer's computer network, it produces a SmartLabel for every order that the retailer ships out. Encoded on the label is information about the customer and what items are in the order being shipped. The SmartLabels can be included with each outgoing package or made available online at the retailer's Web site.