Moving Forward in Reverse

Nov 01, 2003 10:30 PM  By

LAST JUNE FEDEX GROUND EXPANDED its return options for catalog and online retailers by introducing a new Consolidated Return Service. This service targets less time-sensitive returns and consolidates individual returns from multiple customers into a single return box. Catalog and online customers can return merchandise at about 3,000 FedEx-approved locations nationwide. Every return is assigned a tracking number that allows customers and retailers to monitor progress. FedEx charges retailers a flat fee for each consolidated return, in contrast to the common practice of many retailers who deduct a flat return shipping cost from customer refunds. According to FedEx, about 20 companies are currently signed up.

HOW IT WORKS

Once a customer indicates to the participating retailer that he or she wishes to return an item, the process goes like this:

  1. The retailer sends the customer return instructions, a return authorization number (RMA), and drop-off information.
  2. The customer takes the merchandise and RMA number to a FedEx-approved location.
  3. The RMA number is keyed into the FedEx system, which generates a return label and provides the customer with a receipt and a tracking number.
  4. The returned item is placed in a FedEx polybag, sealed, labeled, and then placed in a consolidation tote (each return can be held up to three days to permit consolidation).
  5. Totes are shipped via FedEx Ground to a Consolidated Return center for sorting.
  6. Returned items are sorted and reconsolidated by retailer, location, and product disposition. FedEx Ground then provides the final delivery to the retailer.

Some retailers pre-authorize returns and include return instructions with each shipment. Others require customers to contact FedEx themselves to receive return authorization.

TEST RUN

Consolidated Return sounded good, but I wanted to see for myself how well it worked. With the help of Jeff Maddock, product manager at FedEx, I arranged a test return. The test retailer sent me an e-mail with my RMA number, a list of five authorized drop-off locations within 10 miles of my house, and return instructions that were easy to understand. I took my return to the FedEx World Service Center about two miles away. There a FedEx employee keyed in my RMA number and printed a receipt with a tracking number.

Once the return has been processed, the retailer can use a Web-based FedEx business tool called InSight to track return shipments. I tracked the progress of my own test shipment daily on FedEx.com. On the third business day, my return was shipped by ground from the Memphis World Service Center, where I had dropped it off originally, to the FedEx Consolidated Return Center, where it arrived on the sixth business day to be sorted and combined with other returns going to the same retailer. Then it was re-shipped via ground to its final destination, where it was delivered on the eighth business day. According to FedEx, average transit time for consolidated returns is about five to eight business days.

INDUSTRY FEEDBACK

When you really want to know if a new service works, ask its users. Home shopping television network ShopNBC is a strong supporter of the new FedEx service. The company implemented the Consolidated Return service last May on about 10%-15% of its returns, and plans to extend it to most returns next year. According to Howard Fox, ShopNBC’s senior vice president of operations and customer service, it all started with a good relationship with FedEx and ShopNBC’s commitment to “red-carpet” customer service. “We wanted to explore opportunities to simplify the returns process, and so far customer feedback has been very positive,” says Fox. In addition to customer service benefits, says Nathan Schmitz, director of operational analysis for ShopNBC, the Consolidated Return program has helped the firm reduce costs, with estimated savings of 15% or more.

Fingerhut Direct Marketing, based in Minnetonka, MN, started using Consolidated Return Service last July for small items. Larger return items are directed through FedEx Ground Services. Fingerhut customers call for return authorization and an RMA is mailed or e-mailed. According to Fingerhut, the process has received a lot of positive feedback from customers. Fingerhut would recommend Consolidated Return Service to other online and catalog retailers, says a spokesperson, who adds that the service represents “a lower-cost alternative and a good service for those customers that are mobile and have access to the drop-off areas.”

CHOOSING THE RIGHT PROVIDER

FedEx Consolidated Return Service may not be right for every catalog or online retailer. Factors to consider include proximity of return centers to customers, product size (items must fit in a polybag and weigh less than 10 lbs.), product value (declared value not available), and consistent transit time (delivery time not guaranteed). Rural customers may simply be too far from FedEx centers and might be better served by the U.S. Postal Service.

In addition to this new service, FedEx offers several other options to help with returns: Billable Stamps, a preprinted option for manual returns; Call Tags, scheduled FedEx pick-ups of returns; and On-Line Return Manager, a Web-based solution that allows FedEx shipping return labels to be transmitted to customers by e-mail.

Other companies have also tailor-made services to help catalogers with returns. The U.S. Postal Service offers its Merchandise Return program, and Texas-based Newgistics (www.newgistics.com) provides SmartLabel. The USPS has also proposed a new program whereby retailers can save money by retrieving their returns from USPS facilities — like the Parcel Select program, but for returns.

In my view, FedEx’s Consolidated Return Service is a fresh and innovative step forward for reverse logistics. If you want to improve visibility and control, lower costs, and improve customer satisfaction, this may just be the program for you.

JEFF KLINE, founder and president of Kline Management Consulting (www.jklineco.com), can be reached at (901) 850-0645 and jeff@jklineco.com.