Traditionally, retailers have regarded returns as an unfavorable, but necessary, part of doing business. However, proactive retailers are now realizing that streamlining their reverse logistics processes creates a competitive advantage and is essential to increasing bottom line profitability. Retailers now view returns management as a logical method for completing the value chain. Direct retailers are fostering customer loyalty through a quick and painless return experience.


When customers receive merchandise that they didnt order, doesnt fit or didnt want, their relationships with the retailer are put in jeopardy. Add to that the hassles related to the return waiting in line at the post office to pay for return shipping or having to call customer service departments to determine if the return has made its way back to the retailer and the retailer could lose that customer for good. In order to promote a high level of customer satisfaction, the returns process must be convenient and simple to understand. According to a December 2005 survey conducted by Harris Interactive, 92% of consumers said that they are likely to shop with a retailer again if the returns process is convenient. The same poll also found that 82% of consumers would not shop again with a retailer who has an inconvenient return policy.


Technology Makes It Easy

The first step in implementing a successful returns management solution is to plan for the return at the point of order. Retailers should generate pre-paid intelligent return labels onto outbound order summaries by integrating the customers order information onto a return label barcode. If the customer returns the merchandise, the barcode can be scanned and customer return information reported back to the retailer within days after the customer drops the package into the mail stream. This allows customer service departments to proactively address customers exchange or credit needs earlier.


It is also important for retailers to understand that the return experience doesnt end for customers just because theyve placed packages in the mail. Once the return is initiated, continuous communication with the customer becomes essential to ensuring satisfaction with the completed process. It is important to have systems in place throughout the return cycle for collecting the intelligent barcoded data and reporting vital information back to the customers, assuring them that the returns are on track and that their refunds are being processed in a timely manner.


The overwhelming majority of customers said that they are likely to shop with a retailer again if the returns process is convenient.


Returns Can Be a Good Experience

Customer satisfaction with the simplicity and convenience of the returns process is only a beginning to ensuring loyalty and repeat business. It is important that the retailers relationship with the customer be further nurtured through personalized return marketing programs. Retailers can turn what is typically a point of customer dissatisfaction into a one-on-one marketing opportunity by leveraging customer data to offer unique discounts and special offers based on customer preferences. The Harris Survey showed that when returning merchandise purchased online or through a catalog, 88% of shoppers are somewhat or very likely to take advantage of a discount on the next purchase.


Beyond boosting customer loyalty and spurring repurchases, an organized returns management program can also help retailers increase bottom line profitability and reduce operational costs. Facilitating and accelerating the receipt of returns from customers reduces the amount of time a shopper holds on to unwanted merchandise, giving the retailer a far better chance of putting the item back into stock within the same season it was originally sold. The retailer can then hope to fill pending backorders and sell the item at full price, rather than having to take a markdown.


In addition, when retailers implement a returns process that includes Return Merchandise Authorization (RMA), they enable customers to choose which items are being returned and for what reason prior to return shipment. This step allows retailers to aggregate valuable information about each item being returned, such as how each parcel is shipped, which destination it should be sent to based on asset value, reason for return and order date or serial number. This advance visibility results in greater inventory management and eliminates the costly step of sorting packages one-by-one to determine the packages destination.


Determining Your Returns Process Results

No returns program is complete without a way to measure its success and impact. Retailers need to be able to track and measure customer purchases, repurchases and retention rates to determine the correlation between customer returns and buying behavior. This valuable data allows companies to tailor customizable offers as well as measure loyalty. With an analytics component in their returns marketing program, retailers are empowered to understand customer behavior patterns.


A well-managed returns solution can distinguish a retailer from competitors and enhance customer loyalty. By delivering the greatest customer convenience and at the same time realizing maximum operations control, retailers are turning returns into an integral component of business success.


Jonathan Dampier is the Vice President of Marketing, Strategy and Strategic Alliances for Newgistics. He can be contacted at 512-225-6040 or