Tech Industry

Online shoppers evade holiday hassle

Returning gifts purchased online is confusing for the customer and troublesome for the store. But a number of merchants are letting people take their returns to brick-and-mortar shops.

It is the dreaded season of gift returns--a particularly thorny issue online, where sending back a gift is usually confusing and costly for the customer and equally troublesome for the store.

After years of trying to improve the system through software and online tools, an increasing number of merchants are falling back on a decidedly low-tech answer by simply letting customers bring their returns to brick-and-mortar stores.

"More retailers are accepting goods in their stores, and that number will continue to grow," said Kate Delhagen, a Forrester Research analyst. "Wal-Mart didn't allow it last year, but this year they do. Overall, it's a positive for the consumers and, in some cases, for the retailers--but not always."

As more e-tailers expand their presence in physical stores through kiosks and partnerships, it has become increasingly easier to buy goods online and pick them up in a store. For instance, Amazon.com customers can buy select electronic products online, then pick them up from their nearest Circuit City store. The deal between Amazon and Circuit City, struck last August, works the same way when a customer wishes to return goods. They can cart them back to the Circuit City store--particularly handy if the person who received the gift isn't computer-savvy, isn't sure how to return something to an online store, or doesn't want the hassle of trying to mail back the goods.

Amazon shoppers also can return items by mail, with the company providing mailing labels on its site that can be printed and put on a package. Amazon will pay for the shipping if the problem stems from its error, such as damaged goods or the wrong item being sent.

Tim Storm, an avid Amazon shopper and founder of Fatwallet.com, an online message board dedicated to bargain hunting, said he used the Amazon return service when he realized a book he'd ordered, "The Rules of Neighborhood Poker According to Hoyle," was missing the first chapter.

"I received an e-mail from Amazon saying they were sorry and that a new and complete copy would be shipped in a couple days," Storm said.

Making returns go smoothly is critical for retailers that want to maintain loyal customers. In a poll of potential online shoppers, research firm Jupiter found that hassles with returns was the third reason cited--after shipping costs and credit card security fears--for why customers don't shop online.

For those who do go online, the issue of returns is bound to come up at some point, particularly with apparel; there are no fitting rooms on the Web, and colors and textures can be difficult to determine on a computer screen. Of all online purchases, about 5 percent are returned, according to Jupiter.

The Spiegel Group, which includes Eddie Bauer, Spiegel and Newport catalogs, launched a new return policy this year that lets customers drop off returns at a nearby postal facility without having to fill out forms, repackage the goods, or spend hours waiting to talk to customer service agents. Karla Villalon, spokeswoman for Newgistics, the company that developed the return system for the Spiegel Group, said that some customers can receive instant credit card refunds or in-store or catalog credit. She said the whole process takes less than 5 minutes.

Retailer Lands' End, which has 16 outlet stores in four states but is known mostly for its catalog, also encourages customers to return goods bought online to the brick-and-mortar stores.

The cost of clicks
If sending back items hasn't been very pleasant for customers, it's a major headache for the retailers as well.

The logistics are daunting, and the costs can skyrocket. When a product is returned, a store must determine the condition of the item--whether it's damaged or soiled, whether it can be resold or liquidated, or if it must be destroyed, Villalon said. The retailer may need to ship it back to the manufacturer, set it back on the shelf, or toss it in the garbage.

"When you have a wide range of options, it gets complicated," Villalon said. "Retailers would rather focus on supplying customers with goods rather than this difficult process."

Many Web retailers have turned to outside companies to oversee the returns process. These companies, including United Parcel Service, Returns Online and ReturnCentral, offer businesses differing systems on handling returns. ReturnCentral, for example, offers a software tool that automates some of the procedures involved with accepting returned products, such as tracking goods, issuing credit to a customer's account, and creating shipping labels. Returns Online contracts with retailers to accept and process merchandise at one of its warehouses and charges on a per-transaction basis.