Until recently, a hassle was what most catalog and online customers could expect if they had second thoughts about a purchase. But not now. Now direct sales merchandisers who want to get a leg up on the competition and a foot in the door with consumers offer returns solutions that make sending back merchandise a walk in the park.
When Nordstorm Direct was looking for its own perfect fit in returns solutions, the company chose Parcel Return Services through American Package Express (APX) and the U.S. Postal Service. Nordstom demands the ultimate in service and conven-ience for its customers. Nordstrom reasoned that handing a parcel back to a letter carrier in a pre-paid, pre-addressed package or dropping the parcel at the local post office or neighborhood collection box would make the returns process easy and pleasant for customers.
And Nordstrom understands what keeps customers coming back. Nordstrom started out as one downtown
Through Parcel Return Services, the U.S. Postal Service and logistics partners are providing merchandisers, such as Nordstrom, economy and value along with the ultimate in customer conven-ience. "No one can take a return out of a household better than we can," says U.S. Postal Service Package Services Manager, Jim Cochrane. "We touch every household, every day. We can bring the returns counter to the customer's door."
A Shoe-in with Customers
With direct sales growing faster than retail, traditional merchants, such as Nordstrom, are looking for ways to gain and retain on-line and catalog customers. An easy returns solution is part of the strategy. Consumers have agreed that programs such as Parcel Return Services offer important value-added customer service. They also say ease of returns has helped build their loyalty to merchants who offer the service. A recent Harris Poll survey showed 95% of direct shoppers said they would shop again with a direct retailer that made the returns experience more convenient. Additionally, 76% of these shoppers said they felt a convenient returns process is one that uses a pre-paid, pre-addressed return label that can be sent from anywhere within the Postal Service system.
Nordstrom's Manager of Transportation, Scott Lindgren, says the returns program the company currently runs in conjunction with the Postal Service and APX provides Nordstrom Direct customers with an easy way to make returns and is a fast way for all packages to get back to Nordstrom. "Those returns get right into the BMC and are then picked up by APX and taken to a regional facility," notes Lindgren. "Information on those returns is available to us immediately. The bottom line is we can move packages faster and more efficiently through this process."
According to Lindgren, another big advantage is being able to "control" the returning package while it's en route. "Visibility is everything," he says. "Our customers want things done quickly and inexpensively. They won't just send a package back, hope for the best and then look for a credit on their statements 14 days later that's not good enough. They want to know where that package is, so we have to track it every step of the way."
Lindgren says the Parcel Return Services program allows them to have full tracking visibility. For example, APX returns and data management services provide such vital information as the estimated date of delivery, package and customer details and billing. In essence, the complete custodial control and data visibility throughout the delivery channel is mirrored and present in the returns process. "While cost is important to us, the main point we concentrate on when looking at a returns program is the customer experience," says Lindgren. "As far as the customer is concerned, the returns experience must be easy and fast. A bad experience isn't going to be attractive to that customer, and in turn, won't be beneficial for the shipper."
Sure-Footed Solution
Parcel Return Services is a two-year experiment launched last fall by the U.S. Postal Service to help streamline the package return process for shoppers while, at the same time, providing shippers with lower rates by consolidating the returns. "The experiment will allow for up to 20 participants in the first year and another 10 after that," says package services manager of Product Development, Sharon Daniel. "If all goes well, we will be filing for a permanent offering that incorporates what we learned from this test." The service allows shippers to pick up returns at a local Bulk Mail Center (BMC) or Destination Delivery Unit (DDU) in their service area. This method saves Postal Service money, and that savings is then passed on to the shipper.
Logistics providers Newgistics Inc. and APX are currently partnering with the U.S. Postal Service to provide Parcel Return Services and Parcel Direct has conditional approval. "The Postal Service is expecting many other logistics providers to apply to use this service, including traditional competitors," explains Daniel.
Save Some Shoe Leather
According to the National Retail Federation, direct sales are up 18%, a growth that is far outpacing that of retail, and direct mail merchants are quickly recognizing how important a quick and easy returns process can be to their businesses. ·
Newgistics, Inc. knows this first-hand as it has been providing a "SmartLabel" solution for over two years. The SmartLabel is a pre-paid, pre-addressed return label that is sent out along with a customer's order. If the direct mail shopper decides he doesn't want to keep the merchandise, he just attaches the label to the package and then chooses the easiest or most convenient way to get the package back for return shipping. Options include taking it to the local post office, handing it to the letter carrier or it could even be dropped off at the company mail center where he works. This is where the SmartLabel goes to work. "We have developed software that is able to maintain control of a package everything from calculating the correct postage to verifying consumer information," says Newgistics Vice President Jon Wittnebel.
The label includes a barcode, which allows the return to be sorted to the nearest BMC where Newgistics picks up the returns, pays the postage, processes the parcel and then provides transport to the final destination. "The post office is paid through an electronic manifest system," explains Jon Wittnebel, "and the mail order company is billed for handling and postage." Some companies charge the cost of the return against the customer's refund, while some retailers will waive the fee.
As soon as the barcode is scanned, customer data is sent directly to the merchant, informing them of the return. This enhanced information enables the retailer to quickly meet a customer's exchange or credit needs and saves time by eliminating additional phone calls from customers wanting to know if their return packages have arrived. In addition, personalized e-mails may also be sent to customers on behalf of the retailers, letting them know their returns have been received and are being processed.
With the help of SmartLabel's barcode information links, the package can be tracked through specific control points until it arrives back at the merchant's warehouse where it can quickly be returned to inventory. "We help handle millions of returns per year for over 20 catalog titles," says Wittnebel.
Getting off on the Right Foot with Customers
Logistics provider APX currently has 16 parcel distribution centers and 20 secondary facilities providing nationwide delivery to DDUs. "We are constantly searching for ways to best leverage our network," says Kevin Collins, vice president of Business Development for APX. "APX Returns is one of those ways. Our presence at the DDUs and BMCs allows for both R-BMC and R-DU returns services."
"The fact that we're delivering on a daily basis and not outsourcing our operational activity allows us to make very low-cost pickups each day to take advantage of existing, low-cost operations," he continues. "Whereas other providers are forced to pay a premium for outsourced operational activity."
Besides the low-cost advantage, Collins says this arrangement gives his customers a value-added service to pass along to their customers. And satisfied customers builds loyalty that will ultimately add to the company's bottom line. "The Postal Service was looking for ways to leverage the success of the Parcel Select business model," says Daniel. "Since many consolidators are already at our facilities, we thought the opportunity to take packages out would be a perfect fit. These consolidator business partners are able to negotiate contracts and provide bundled solutions that provide us with indirect pricing flexibility."
"Overall, we like to look at the service we provide for returns as being almost identical to outbound delivery only in reverse," adds Collins. "We want our customers to see the same benefits in their returns as they are used to seeing in delivery in other words, low cost, speed in transit, full data visibility and streamlined efficiency. Returns information is linked to the original order number allowing our customers to be more proactive."
Collins says finding operational synergies is the key to a successful returns program. "It needs to make sense," he says. We work with our customers through the whole integration process. Returns labels can be included in the original outbound order or available for download later on. Our customers expect flexibility and a returns program that makes sense to their current supply chain."
In order to help keep the returns process as convenient as possible for consumers, and to make it even more cost efficient for shippers, companies are now taking advantage of the DDU solution. APX has begun picking up parcels at 21 BMCs across the country and is capturing parcels at 6,000-8,000 local post offices (DDUs) around the country.
"The biggest benefit for us is that we would obtain the package at a much earlier point in the mail stream," explains Nordstorm's Lindgren. Lindgren estimates this step will improve efficiency by shaving up to one day off of the returns process. There would also be some cost savings involved. Currently, the program is priced according to the weight of the package and the distance it must travel or is dependent on the specific zone to which it is mailed. A post office or DDU price offers a flat rate for all packages and these savings would be passed on to the client.
Their Boots Are Made for Walking
Direct mail merchandisers already know the value of a good returns services program for customer retention. A recent study by the Postal Service showed that 95% of customers who received merchandise delivered by the Postal Service also returned merchandise through the Postal Service, while customers who received merchandise through other carriers returned their purchases through the Postal Service in more than half the cases. And many merchandisers are turning to the returns solution that customers choose most often on their own. "Merchants do not have to use Postal Service outbound to take advantage of our returns solutions," says Daniel. "There are many solutions for outbound packages but only one clear choice for returns."
So, if the shoe fits wear it. If it doesn't, hand it back to your letter carrier.
