Evan Schuman's StorefrontBacktalk

One of the most logistically challenging situations for any large retailer is the return. Newgistics Inc., a Texas retail service firm, this week launched a tracking service intended to alleviate some of the uncertainty involved in the process.

When it comes to returns, there are questions on both sides. The retailer might wonder: Is the product being returned because of the wrong size or color or is it an actual defect? How much do we owe the customer and how much does the supplier owe us? Do we have to readjust our revenue figures and are there often returns that we need to make a change? And how do we make the return as effortless and pleasant as possible for the customers so that we can keep them as customers?

At the same time, a customer trying to return a product purchased online faces an equally lengthy list of pain points. Does the online site have a physical storefront? Is it local? Will it accept online returns? Do I have to package the return myself? How strict are they about the original packaging? Who pays for shipping if it’s the retailer’s fault?

Newgistics has announced a package that is intended to slightly lessen some of those pains, with a focus on helping shipment and processing. Although Newgistics isn’t directly addressing the most significant concerns of either side, it’s chipping away at what consumers have come to see as the return black hole: What happens after they mail the expensive product back to the merchant?

After the package is shipped, the consumer has no way of knowing where it is, whether it’s been received and whether the recipient can confirm the consumer’s story, such as whether the unit is defective or that the shirt labeled green is actually blue.

“Consumers do feel that it’s a black hole,” said Patti Freeman Evans, a retail analyst for Jupiter Research. Even when the customer calls customer service, “all they can tell them is, ‘I haven’t gotten it yet,'” Evans said. “It’s better to be as transparent as possible.”

Newgistics’ SmartLabel Returns Center tries to do two things: pick up and transport the package from a local post office to another local post office; and provide a Web site for consumers where they can print out prepaid labels and arrange for their returns. The Web site allows the consumer to confirm pickup of their return and for it to be tracked along its full route, to the point where the retailer acknowledges receipt.

What the site will not initially do is confirm for the user that the package was inspected and confirm that the retailer validated?or, for that matter, contradicted?their actual claim, according to Newgistics officials. The risk is that the retailer could say that the box had something else in it when it arrived and the consumer would have no way of proving otherwise. In a physical store location, obviously, a consumer could demonstrate the problem right there and walk away with a signed receipt.

Another limit to the site?which the company said it is considering addressing in a future version?is that it will not house the forms for its retail partners, meaning consumers will still need to get forms from the retailer.

The way the process works is that when a customer needs to execute a return, the customer contacts the retailer to get a copy of their standard return form. The customer then uses retailer-provided information to log into a site created by Newgistics.

The site will generate bar-code images to be printed by the customer and used in the return. That bar code includes much more information than the product’s description, including prepaid postage information as well as bar codes that discuss the customer information along with the invoice data. At every stage, the data is converted into XML and fed into various client retail databases.

The customer then packages it and brings it to a local postal drop-off center. The post office brings it the relatively short hop to the nearest bulk mail center because the address label printed from the Newgistics Web site had identified the nearest bulk mail center and addressed the package accordingly. A trucking firm that partners with Newgistics picks up the package and transports it to the nearest bulk mail center by the retailer.

During the trip, the site is updated with the product’s location. Unlike the tracking systems that major overnight shippers such as FedEx Corp. use, the Newgistics one is nowhere near real-time, often displaying information that is anywhere from 12 hours to 48 hours out of date. But that’s still better than today’s typical postal shipment that has no tracking at all.

Customers can also be sent e-mail and regular mail updates, but retailers would likely have to handle those efforts on their own.

Jonathan Dampier, the vice president of marketing at Newgistics, said these efforts all focused on the objective of keeping the customer happy with the way the return is handled. “We’re getting the customer back into a purchase mode again,” he said.

Beyond a theoretically more coordinated process with customers, added product management director Doug Kern, the retailer also learns more about the return process. For example, many consumers may call about a return, but either never ship or may ship at a later time. With this process, the retailer would be alerted that the package had shipped and given an estimate of its likely arrival date.