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USPS Should Help Online Merchants with Product Returns

While product returns are a problem for online sellers, one business’s headache is another’s opportunity. The USPS Office of Inspector General (OIG) pegged the U.S. returns business for shipping carriers at $3 billion annually and said it’s expected to approach $4 billion by 2016.

You may have seen the USPS “Already There” TV commercials where postal carriers urge consumers to consider giving their product returns to them when they’re delivering the mail.

While the ad is aimed at people at home, the OIG set out to identify opportunities for the Postal Service to grow its merchandise returns and forwarding revenue clearly with an eye on the business market. In a recent report, it said it had researched global trends, reviewed actions of foreign posts, met with Postal Service managers and returns companies, and examined prior U.S. Postal Service Office of Inspector General reports.

The OIG report noted that the Postal Service has been developing a “compelling suite of returns products” focused on three areas:

1) Pricing – Making returns simple, flexible, and predictably priced for shippers with roundtrip, flat-rate, and pay-as-you-go pricing models.

2) Labeling – Simplifying labeling with labels that can be used to both send and return merchandise and on-demand return label delivery.

3) Routing – Evolving “intelligent” returns to be location dynamic so shippers can return to any location – such as a retail store, consolidator, or warehouse – depending on their changing inventory needs.

It then identified three revenue opportunities that go beyond the Postal Service’s current initiatives. One scenario would eliminate the need for shoppers to print a shipping label by having the postal carrier print it from a handheld device!

In another scenario, the USPS would store returns in its warehouse before returning to the merchant.

1) Digital Parcel Label – The Postal Service could create a digital parcel label for customers so they would not have to print out shipping labels to return items to merchants. With this technology, the customer would notify the merchant of a pending return and the merchant would send a Quick Response code (QR code) to the customer’s mobile phone. The customer would schedule a carrier pickup and the carrier would scan the QR code and print a label from a handheld device. Alternatively, the customer could visit a Post Office where a clerk would scan the QR code directly from the customer’s phone, print a label, and attach it to the package.

2) Warehousing – The Postal Service could offer a service where returns are sent to one centralized postal facility and temporarily stored until they reach a certain volume threshold. At that point the Postal Service would forward the merchandise to a location specified by the merchant. The Postal Service could market this service primarily towards small- and medium-sized businesses that lack storage space.

3) Alternative Delivery Program – The Postal Service could offer a forwarding service to customers in the form of an alternative delivery option allowing them to pick up purchases at any convenient Postal Service retail facility. The Postal Service could market this product to busy customers who might want their packages forwarded to a location of their choosing, rather than wait for delivery to their home or business. This program could take advantage of one of the Postal Service’s greatest assets – its ubiquitous retail presence – and help improve its competitive position in the package business.

The USPS is pinning its future on package delivery, and the OIG warned that “innovative returns and forwarding products and services are critical pieces of a competitive package delivery program.”

“The Postal Service has the technological expertise needed to develop a digital parcel label, unused facility space for warehousing services, and the infrastructure and flexibility to develop an alternative delivery program,” it said.

Not only would returns help the USPS strengthen its package-delivery services, it would also result in additional revenue for the agency, according to the OIG report.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.