December 2, 2003, 12:00 AM

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Today many Internet merchants deal with piecemeal returns that require extra time and labor to process once they’re returned to the warehouse. But the FedEx Consolidated Return Service expedites the return process in several ways. With FedEx, there is no need for a retailer to sort and process returns at a centralized facility. That’s because FedEx Ground handles this task at its returns sorting hub. At the hub, consolidated packages (totes) are opened and the polybags are sorted and boxed for the merchant according to their final shipping destination. A bar-coded label and shipping manifest are generated at the time the package leaves the FedEx hub , enabling dock workers to know exactly what’s in the boxes they are about to open and whether the return merchandise is earmarked for restocking, repairing or liquidation.

The Ripple Effect: Enterprise-wide Benefits

With a consolidated returns program in place, merchants can benefit on several levels. An easy and convenient method of returning items minimizes customer frustration and reduces unnecessary package handling and transportation charges. Having prior knowledge of pre-sorted returns also helps retailers reduce processing time. There’s even a financial payback-the flat fee pricing schedule can help reduce customer return charges or provide an opportunity for an added revenue stream.

Expedited returns will translate into a $50,000 a year savings just in postage and returns labor for merchandise in need of repair or exchange at ShopNBC, which is implementing FedEx Consolidated Return Service, Fox says. ShopNBC receives up to 150 returns a day for repair or replacement merchandise. It used to process them by having the customer service rep print and mail a label to the customer. Now reps e-mail a return authorization code to the customer, along with instructions to take the package to a FedEx drop-off point and a list of locations close to the customer’s home. Once it rolls out the service to all returns, it expects to save another $150,000 a year in better warehouse labor scheduling, Fox says. ShopNBC’s fulfillment centers in Eden Prairie, Minn., and Bowling Green Ky., process 1,000 to 3,000 returns a day. “A big issue for us is speed,” he says. “This simplifies the returns process by giving us advanced notice of inbound returns and reduces the workload by identifying the order and customer.”

Consolidating the returns process is paying off for ShopNBC in a number of ways. Advance information on the volume and nature of returns coming back into the distribution center each business day is helping ShopNBC better manage its warehouse personnel. If, for instance, the volume of returns coming in the next day is lighter than normal, distribution center managers can reallocate staff in advance to other duties such as picking and packing outbound orders or restocking shelves.

Knowing precisely what’s being returned and when it will arrive also helps ShopNBC expedite refunds and exchanges, enhancing customer satisfaction by letting customers know when a credit will be posted to their account. When a package is returned, the RMA information is scanned into ShopNBC’s customer service computer system, which then generates an instant e-mail notifying the customer that the return has been received. Once the returned merchandise has been processed and the information reconciled internally, the ShopNBC computer system generates another e-mail informing the customer of the status and amount of the refund. “The payoff for us is less first-time and follow-up calls to the customer service center from shoppers wanting to know about their refund,” Fox says. “Depending upon the season, up to 18% of our daily call volume is answering questions about returns. FedEx Consolidated Return Service and our instant e-mail notification system are reducing that number.”

Industrywide, 25% of customers who return merchandise call to check status of the return. Tracking capabilities provided by the shipper can virtually eliminate the 11% of customers who make more than one call to check status.

Planning for Returns

The phenomenon of Internet time-change happens at a faster pace on the Internet than in the rest of the world-still holds. But even though part of the online buying process happens on the Internet, fulfillment and returns happen in the real world. And so change will be harder to implement there. But forward-looking executives are studying their options and concluding that the sooner they get to a streamlined returns process, the better they’ll be able to compete. “Processing returns shouldn’t be a big guessing game, but for many companies that’s what’s happening because they don’t know what’s coming back and when,” says Robert Segal, analyst with e-commerce market researchers and strategists Frank Lynn & Associates. “Retailers can save labor costs and better utilize distribution centers’ employees if redundant steps are taken out of the process and advance shipping information is used to help expedite the process.”

For now, ShopNBC is among the first wave of merchants innovating its returns process through FedEx Consolidated Return Service. And the benefits to the retailer’s overall operation are multiple. Fox says customers are happier because they are getting their refunds and exchanges processed faster. And less paper correspondence and more detailed information on returns coming back to the distribution center is helping ShopNBC better manage its full-time and part-time workers.

And given that high-volume merchants such as ShopNBC can generate savings of potentially hundreds of thousands of dollars per year, Evans of Jupiter Research says other Web retailers will begin making changes to their own return policies and programs. “The results can be dramatic if change is brought about,” she says. “Returns don’t just impact the customer but have vendor, supplier, and other internal implications as well,”

For additional information on FedEx Consolidated Return Service or other returns services, call 1-888-RETURN3. Information may also be found online at

Nine Steps to Streamlined Returns

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