Newgistics Offers Faster Handling Of ReturnsNewgistics Offers Faster Handling Of Returns

As Christmas approaches, online and catalog retailers are scurrying to deliver their merchandise to consumers on time. But what about after the holidays, when about one-fourth of all orders are returned?

The Spiegel Group, which includes apparel retailers Eddie Bauer, Newport News, and Spiegel, last week began a test in Atlanta, Chicago, Dallas-Fort Worth, Los Angeles, and New York of a new logistics system designed to speed the handling of returned items. The ReturnValet system, created by Newgistics Inc., provides bar-coded mailing labels for shoppers to place on their return shipments. It also offers software, as well as shipping, warehouse, and liquidation services for retailers.

Newgistics is an alliance of investors, including R.R. Donnelley & Sons, which transports returned goods; USFreightways, whose subsidiary USF Processors operates more than 80 warehouses to process returned merchandise; and Spiegel-Hermes General Service, which processes apparel and other soft goods.

Customers drop off returns at one of 4,000 pre-approved, private mail and parcel centers nationwide, where employees scan the bar code and enter the reason for the return into Oracle's iPortal, which links the mail and processing centers to the retailers. Before the shipment leaves, the retailer knows what's coming and why it's being returned. Pre-established rules dictate how the processing center should handle the packages. For example, a retailer may opt not to have damaged items returned at all. Retailers will save 36% to 50% of the cost of processing returns, Newgistics says.

Spiegel estimates that 20% to 25% of its orders are returned, although that figure varies by category. The shipping company delivers Spiegel's returns to its Columbus, Ohio, facility in large cartons, each with bar-code tags listing the items inside. Spiegel expects ReturnValet to reduce the two weeks it typically takes to issue refunds.

ReturnValet is slated to be available from Spiegel, as well as Lillian Vernon and Sincerely Yours, in February. Newgistics makes its money by collecting postage fees for merchandise returns. Retailers can pay for the returns, or they can deduct the shipping fee--estimated to be slightly less than U.S. Postal Service rates--from the customer's refund.

Newgistics also hosts free database servers for each of its customers to track what items are returned.