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Returned goods crucial to e-tailers

Although Americans will return $5.8 billion worth of goods bought online by 2005, new research says e-tailers without a means of reselling those goods stand to lose big bucks.

Regardless of the product, both online and offline merchants know that retail goods are a little like boomerangs: Some of them are bound to come back.

Americans will return $5.8 billion worth of goods bought online by 2005, according to a Jupiter Research study released Thursday. But Jupiter Research, a division of New York-based Jupiter Media Metrix, found that Web merchants without a means to resell returned goods stand to lose big money.

Many merchants that have survived the dot-com meltdown probably thought they had the problem of returned merchandise licked. In the infancy of e-commerce, companies spent large sums of money building systems that let customers mail back unwanted or damaged merchandise with as few headaches as possible.

No best practices existed then. They learned as they went along. However, they did not go far enough, according to Jupiter.

"Companies must maximize the value of reclaimed goods by improving" the way they handle goods that are returned, the report said.

Holding onto returned merchandise is expensive. Companies have to refund money, pay workers to handle the goods, and depending on the size of the product, make room for goods that can take up valuable warehouse space.

Jupiter said companies should create ways to learn why the customer returned the item, then find out the "root cause" of the problem to prevent it from occurring again.

"Companies need to learn more about why their consumers are returning goods," said Darren Bien, a Jupiter analyst. "The data they collect will be the only way for them to reduce returns, identify trends, and most importantly, quickly redistribute the goods."