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USPS's Evolving Package Returns Service



Any e-commerce merchant will tell you that product returns are an absolute necessary component of their business. In fact, some business models expect some sort of a return with each sale. For instance, Stitchfix.com offers a personal shopper service for women’s fashions – sending out 3 or more garments monthly. Stitchfix.com fully expects some garments to be returned. Amazon offers a service called Prime Wardrobe where you can order shoes or garments of differing sizes. You try them on at home, keep what you want, and return the rest for free.


Models like this have increased drastically due to the Covid19 pandemic. Many folks feel safer shopping online for virtually everything and merchants have made it easy to return products that aren’t the correct size or otherwise don’t satisfy the customer.


This summer the USPS announced their third generation of parcel return service called eFulfillment. eFulfillment replaces the ancient MRS (Merchandise Return Service) as well as the Scan-Based Return Service rolled out about 8 years ago. Both of the latter services were retired by USPS in August 2020.


Merchandise Return Service


To see how far USPS has advanced over the years, let’s review how the MRS service worked. Most of you have probably seen a label like this in a shipment you’ve received. MRS was rolled out before the internet existed and when IT resources were very limited for both the USPS and the shipping public. Accordingly, MRS was a very manual process and thus relatively expensive for both the merchant and the USPS.


The merchant would include a label like the one below in some or all of their outbound shipments. If a customer wanted to return a product, they would often call the merchant and receive an RMA number (RMA = Return Material Authorization). They would hand write the RMA number of the label and drop it in the mail. Postage was paid by the recipient – the merchant.




The return labels had a postal address in the town where the merchant was located. As the returns arrived at this Post Office, a clerk had to weigh the package, note where it was shipped from, compute a postal zone (which depends on the origin and destination zip code) and, using that information, compute the required postage. That cost was entered into a log maintained by the local Post Office. Once a month, the merchant would be billed for the sum total of all returned parcels.


Because of the manual nature of MRS, the postal pricing was established at a premium. Additionally, the merchant had to purchase an annual mailing permit. And since there wasn’t a unique tracking number of each return label, the merchant had to determine the sender’s identity by examining handwritten notations on the label itself. So reconciling returns was a slow and cumbersome process for the merchant.


Scan Based Return Service


With the advent of PC postage (e.g., USPS Click and Ship), the returns process improved considerably. A unique tracking number was assigned to each return label which meant the merchant could identify a return from a given customer via that number. The return label looked pretty much like a current-day outbound label. The shipper didn’t pay for the label postage unless the unique tracking number was scanned in the USPS operational network.



The one significant limitation in this system is that USPS didn’t always record a weight for each package. The only weights the USPS could capture would be those where the package was presented to a mail clerk at a Post Office retail counter. There are accurate scales (down to the fractions of an ounce) in every Post Office and the standard of operation is for the clerk to place the incoming package on the scale and then scan the tracking number. That process records the weight and the date/time of USPS acceptance.


The problem with this system is that typically only about 30% of return packages are entered at a Post Office. The rest are simply handed to the local carrier during his/her normal rounds, dropped in a collection box, or given to a USPS van driver. So, the scan-based return service uses the weights that are captured at the retail count to “estimate” the weight of those package that were not weighed. In other words, the merchant is often billed based on an average weight not the actual weight of each package.


Aside from this limitation, Scan-Based Returns represented a major savings for the USPS because all the manual data collection and postage computation was eliminated.


Introducing eFulfillment Returns


You are probably asking yourself “Why doesn’t USPS weigh all of the return packages? Then they’d have an extremely accurate system, charging the appropriate postage cost on each and every return parcel!”. Until recently, they couldn’t. But now USPS is prepared!


The USPS delivery network is a network with many nodes. UPS and FedEx have a different model with a single national node located in Memphis TN. Every UPS and FedEx package flies to the Memphis hub every evening and there are weighed, rated by automated equipment and sorted to their eventual destination.  UPS and FedEx had to make one very substantial investment for their Memphis hubs – installing scanners, conventional scales and dimensional scales.


USPS in contrast, had to update the scales on sortation equipment in hundreds of “plants” – major, square-block-in-size USPS facilities located throughout the nation. It was a 40 million dollar investment but it was completed.



The eFulfillment return label looks pretty much the same as the scan-based return label. Again, payment is required only if the label appears in USPS operations. But when this type of label is detected, USPS transmits the computed cost and package particulars (e.g., weight, induction zip code) detected by USPS operations. This information is reported to the entity that created the label (i.e., the postage provider) who in turn reports that cost to the particular postage account holder (the merchant).


Summary


Now you know all there is to know about USPS returns! You will be seeing this new service roll out through all the major postal channels. International Bridge was the first to implement eFulfillment and you can learn more at https://www.myib.com

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