Online sales grew by more than 30% in the fourth quarter, but store sales slid by 6.1% year over year.
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The contents of each box are bar coded on the outside; the codes match different disposition instructions set by Lillian Vernon. Workers at USF Processors’ Dallas-area warehouse scan the bar codes when boxes arrive and know instantly whether to expedite return, send the items back to manufacturers, or liquidate them. Lillian Vernon gets back only the items it wants to restock.
Good for two
“We save costs through the process of aggregating items rather than sending them back one two-pound package at a time,” the Newgistics spokeswoman says. “And USF Processors are experts at this. They can handle perhaps 100 items per staff hour versus many retailers we talk to who can handle about 10 items per hour. There are a lot of efficiencies built into the system, so we can offer service at a lower unit cost to handle the items.” The customer, meanwhile, gets a neighborhood drop-off point, cheaper return shipping rates, and rapid credit for the return.
“There is a market for this,” says Schatsky, who tracks the growing field of outsourced e-fulfillment services, including returns. “It’s the kind of thing that you can do more efficiently if you’ve been specializing in it for a long time.” However, he adds, such services may prove to have more success with higher priced goods being returned in high volume.
Postcards and package inserts
No word until spring on how many Lillian Vernon customers-of whom there are thousands in the Dallas-Fort Worth area-will choose the Return Valet option, or what effect it will have on the company’s bottom line. The service was promoted locally through postcards and inserts in packages mailed to the area, as well as by call center agents taking customer calls from Dallas-Fort Worth.
But Hochberg already says he’s confident that making returns easier with the new service won’t increase return rates. Returns at Lillian Vernon stay in the single digits as a percentage of sales-in part because of the company’s decision not to sell fashion or consumer electronics where return rates are higher than for general merchandise.
“The Internet is a small part of our business-but it’s the fastest-growing part,” says Hochberg. “If this is successful we’ll roll it out in other markets. We hope it will be good for our customers and good for us.” l