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SmartLabel Returns Benefits to Spiegel

A change in The Spiegel Group's returns process has improved the speed with which it processes returned items and credits customer accounts, and the system has received strong buy-in from customers.

The system, called SmartLabel, from returns management services provider Newgistics Inc., uses a pre-addressed return label with all shipments. Customers who use the label to return items don't have to wait at the post office to determine shipping. Instead, they pay a flat fee that is charged to their credit card once Spiegel receives the item.

Seventy-seven percent of customers who returned merchandise from Spiegel brands — Eddie Bauer, Spiegel and Newport News — during the holiday shopping period used SmartLabel.

“The 77 percent was more than what was anticipated,” Spiegel spokeswoman Allison Scherer said. “Customers responded positively and strongly in a more immediate fashion than we expected.

“With SmartLabel, the package flow is consistent and we can regulate and control the flow of packages, if necessary. One important way we save money is we can match our staffing to the package volume, and that has significantly reduced our overtime expense overall.”

Packages returned by consumers first go to one of seven regional Newgistics facilities, where they are consolidated with other Spiegel returns and sent to the retailer in bulk. Newgistics notifies Spiegel of every return it receives.

Spiegel promises customers it will credit returns within 14 calendar days, Scherer said, so “it's important for us to have the information in advance so that we can deliver on that promise to customers, regardless of the time of year. We can e-mail our customers and tell them that we have received their package, and that their credit is coming.”

Newgistics said it charges Spiegel a per-package fee based on the weight and zoning of the merchandise.

Spiegel charges customers $6 for packages weighing 3 pounds or less and $8.50 for packages over 3 pounds. Eddie Bauer charges a flat $6 fee, and Newport News charges $5.95.

In a Newgistics study to understand consumer price elasticity in returns, the company found that $6 to $7 was well within the acceptable range, and that is what it suggests its retail clients charge their customers.

This year, Newgistics plans to extend SmartLabel to offer what it calls field-based dispositioning that would further improve routing of returns.

“We believe that the big idea here is asset recovery, or getting that product back into a revenue cycle,” said Janet Mitchell, senior vice president of marketing at Newgistics. “So right now, we are returning merchandise back to the merchant, but in the future, some of that merchandise might return back to the vendor, or the outlet store, depending on company business rules.”

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