Chain Store Age: Multichannel Retailers Streamline Returns Operations
By Deena M. Amato-McCoy
Through special arrangement, what follows is an excerpt of a current article from Chain Store Age magazine, presented here for discussion.
JupiterResearch projects online sales will reach $95 billion this year meaning many retailers, big and small, will come out feeling pretty good about top line performance for 2006.
Which companies come out winners and losers in the online arena can often be directly tied to customer service. Often, discussions of online customer service focus on how easy it is to navigate a site and speed of fulfillment. Increasingly, however, consumers view return policies as an integral piece of the customer service equation.
Jonathan Dampier, VP marketing and corporate strategy, Newgistics, told Chain Store Age, “Holiday shoppers are clearly concerned with returns programs.”
“In fact, many consumers decide where to shop based on a retailer’s return policy,” he added. “If they know it is inconvenient, it is unlikely they will make a repeat visit.”
Road Runner Sports is among the many that have upgraded returns program to satisfy shoppers.
“Our vision into returns was limited. We had no way to track incoming merchandise,” said Jennifer Melzer, director of operations, customer care, for Road Runner Sports.
When consumers needed to make returns, Road Runner was flexible, allowing product to be shipped back through carriers including FedEx, DHL and UPS. Because each of the shipping companies used their own proprietary tracking systems, Road Runner customer-service representatives weren’t always clear if returned product had actually made it back to the retailer.
“Shoppers would call expecting answers about merchandise credits, and we didn’t know if the return actually arrived or if it was sitting in the trunk of their car,” said Ms. Melzer.
This bad situation only got worse once the holiday shopping season rolled around. Fourth quarter sales would go up and returns would start to hit in the first quarter. Problems related to handling returns meant trouble for the long-term prospects of Road Runner’s online business and the company began its revamp.
“Our only criteria was that we wanted a solution that would support an easy, convenient and low-cost returns program for our shoppers,” said Ms. Meltzer.
Road Runner Sports chose Newgistics’ Smart Label program to simplify the return process.
The retailer’s customers receive a pre-paid return label complete with Road Runner’s return address, a barcode and the prepaid indicia with each shipment. To make a return, customers repack the merchandise, affix the sticker to the outside the package and drop it in the mail.
Packages are routed to a dedicated Newgistics’ consolidation point where it is scanned routing data is relayed to Road Runner’s ERP (Enterprise Resource Planning) system.
Merchandise is moved onto trucks and sent back to Road Runner where the barcode on the package label is scanned.
The ERP system compares the package data to the original invoice and authorizes the return. Customers are then credited for the return minus a $8.99 Smart Label fee.
Ms. Melzer said, to her surprise, returns actually decreased after the company instituted the new program.
“It helped us to improve our service and lower our return rates,” she said. “It used to take up to three weeks to credit customers. We have cut that time in half. Further, we handle a 48-hour credit turnaround upon receiving the merchandise.”
Another benefit of Road Runner’s return program is it has helped decrease volume to the company’s call centers by 30 percent. Roughly 70 percent of Road Runner’s online shoppers use Smart Label.
There are other benefits associated with the use of the program, according to Ms. Melzer.
“One major advantage is that Smart Label informs us of incoming freight. This helps us to staff more appropriately and cross-train our employees in the DC, especially when handling post-holiday returns,” she said. “This helps us significantly save labor costs. Before, we had no idea of what would hit our dock and how many people we needed to help.”
Discussion Questions: How important are product return policies and procedures to the average online consumer’s perception of a retailer’s customer service?
What systems (retailers and/or technology provider) do you believe does the best job of handling online returns?