Improve Inventory Visibility, Customer Satisfaction

According to a survey conducted by Harris Interactive, an easy and convenient return process impacts customer loyalty. If an online or catalog retailer's return process is expedient, 89% of consumers reported a likeliness to shop with that retailer again. Meanwhile, 80% of consumers stated they were unlikely to shop again with a catalog or online retailer with an awkward return process. For multichannel retailer Road Runner Sports, which sells running shoes and apparel via Web site, catalog, and eight retail stores, adding ease and visibility to its return process is critical to maintaining its customers.

Jennifer Melzer, director of customer care and operations for Road Runner Sports, sought a streamlined return process after realizing the retailer's top customer service call was to check the status of returns. "The information our customer service representatives could provide for consumers was limited," says Melzer. "We didn't have the ability to track packages, nor did we even know the merchandise was coming our way." Internally, Road Runner Sports had difficulty staffing its DCs for return processing because it had no idea how many would arrive each day. More importantly, the retailer wanted to make the return process simple for customers, in hopes they would return for future purchases.

Melzer spoke with several providers of returns management solutions and chose the Newgistics SmartLabel solution. In eight weeks, Newgistics created the necessary interfaces to implement the SmartLabel solution with Road Runner Sports' existing Web site and CRM (customer relationship management) software. "SmartLabel provided earlier visibility of merchandise being returned than other options, because it includes pre-addressed return labels with all purchases, and it uses the USPS [United States Postal Service]," states Melzer. "Using the USPS provides customers the convenience of dropping a package in any mailbox or giving it to any postman."

Currently, with the preaddressed return label, all packages are intercepted and transferred to Newgistics' transportation network approximately one to two days after they enter the USPS system. Newgistics scans bar codes on return labels upon possession of packages, and merchandise information is automatically sent to Road Runner Sports' Oracle CRM application. When the retailer receives notification that Newgistics has returns in hand, its system automatically sends e-mail messages to customers, thus reducing the inquiries received from Road Runner Sports' customer service group. Approximately three to five days later, packages arrive at the retailer's DC for processing, at which time another e-mail message is sent to customers.

Improve DC Efficiency, Increase Customer Security
"Now, we schedule our return processing staff based on the number of packages planned to hit our dock each day," states Melzer. "We loan people out to other areas of the warehouse when fewer returns are expected, which improves efficiency at our DC." Merchandise returned to Road Runner Sports reaches its DC approximately 30% to 50% faster than prior returns did. Furthermore, as soon as the system went live, the retailer's call volume decreased by at least 5%.

The retailer frequently receives compliments from customers on the ease of its return process. Its customers like receiving the automated e-mail messages because it provides a sense of security for them — they know the packages are en route or were received without having to place a call to Road Runner Sports' customer service area. "Our largest concern was that we'd see an increase in the number of returns received because we made it so simple," says Melzer. "However, since we began using the SmartLabel solution, we've actually reduced the number of returns we process. Though we can't attribute the reduced number of returns solely to this solution, we're happy the number of returns processed didn't increase. Overall, we average only a 12% to 15% return rate, which is quite low for a direct shoe retailer."