Gartner says e-retailers can reduce returns processing costs by automating

Research company Gartner Inc. estimates product returns will cost web merchants $3.2 billion this year. Retailers could drastically reduce costs by automating web sites to process product returns, Gartner analysts said at the Gartner Spring Symposium/ITxpo 2001 in Denver.

"An online order, self-service product inquiry and, if required, automated return data and RMA can reduce the number of returns and the cost of returns up to 73%," said Geri Spieler, research director for Gartner. "The key area for reducing returns can be managed for online and offline purchases by using a web front-end up to the point of disposition. Merchants can reduce the cost of expensive call center calls, order look-ups, data entry, return authorization and second- and third-stage shipping by integrating business rules into an automated rules-based engine for return processing." Electronic front-end customer service can also reduce returns by integrating frequently asked questions and trouble shooting data into reason codes that alert the customer to corrective action and thereby eliminate a return. Gartner highlighted four steps necessary to reduce return cost.
--Enable online self service. Integrate product warranties, frequently asked questions and online chat support for product lines. This allows customers to resolve questions and problems during the selection process, thereby reducing the number of returns.
--Create a return order template. The template is a link to the customer`s order history that includes all order and transaction data. It begins by allowing a customer to send and receive an electronic communication and customized return label, instead of calling into a live call center and hand-entering a return form.
-- List reason codes on the web site return template. Template information must be linked to product warranty data and company business rules. Based on the merchant`s business rules, an RMA can be generated if necessary, in addition to a customized address label and bar code that contains all the data necessary to manage the entire process once the box with the returned item is received and scanned.
--Partner with a shipping company that can create return shipping labels. The return label must contain all the customer information regarding the return. This data is then integrated into a three-dimensional bar code design, which is formatted and contained in the new label that is sent to the consumer. The return label is addressed to the ultimate proper disposition destination. This greatly reduces resending costs, particularly if the product is destined for liquidation or repair.

"Returns are expensive,” Spieler said. “They tax resources and lower profit margins. Without a well-structured return system that has been automated for maximum efficiency, returns can erode 100 percent of the profit margin on the cost of goods sold."