CBA publishers and retailers are taking a new look at an old problem—returns—with an eye to possibly reinventing the process. Universal Solutions Incorporated, a "reverse distribution" company headquartered in Winston-Salem, N.C., recently presented its returns management model, "One Box," to key publishers and suppliers in the CBA industry. USI, which operates seven returns centers for 140 manufacturer and distribution clients (including Proctor & Gamble and the pharmaceutical industry), is currently doing a feasibility study to see if the implementation of that model would be workable in the CBA market.

In USI's One Box process, retailers would place mixed publisher and supplier returns into one carton, and send it to a USI returns center, where merchandise would be sorted and managed for publishers as specified. USI currently processes more than $1 billion annually, with approximately two million items handled each month. "USI has the resources and capabilities necessary for achieving economies of scale through high-volume reverse distribution," said USI's manager of business development Dan Fadgen.

At the Evangelical Christian Publishers November meeting in Tucson, Ariz., USI CEO Jeff Piedmont, Dawn Bland, executive v-p of the consumer products division, and Fadgen presented information on the feasibility study the company is conducting with 65 representatives in 11 business segments of the CBA market as well as with HarperCollins and Von Holtzbrinck Publishing Services in the general book market.

The company touted many publisher benefits at its presentation, including maximizing operation efficiency; decreasing return to inventory cycle time; case quantity returns capability vs. small package returns processing; online visibility of returns through "UniversaLink"; and services to help reduce damaged merchandise.

Bland said the "reverse distribution" process offers multiple benefits to retailers, including the ability to eliminate a full-time staff equivalent; managing returns by category rather than by supplier; and a reduction in freight costs. "I think this is going to be one of the most cost-saving, significant improvements that we can possibly make in our industry," Steve Potratz, president of independent bookstore consortium the Parable Group, said. "Inventory is the one area where our stores have the most cash tied up, and consistently dealing with returns is something every store struggles with."

According to Fadgen, under USI's model retailers pay the shipping cost of the returns box(es) to USI, and participating manufacturers then pay on a per unit basis. Retailers pay for nonparticipating manufacturer returns on a per unit basis. Distributors function as retailers.

At Zondervan Publishing House, executive v-p of sales Cris Doornbos said his reservations about the process are "simply whether USI could do the job better for less money than we are currently doing it for," adding that "Nobody in this industry likes returns. Here is a company whose sole purpose in life is to take care of them. We owe them a look." Julie Burns, president of Ingram Book Company/Spring Arbor Distributors, said in terms of efficiencies she sees both pros and cons to the initiative. "When a company can provide a mechanism for retailers to bundle up all their returns, it would be positive for the industry," Burns said. However, she noted that it would be a "huge challenge" to get the process up and running. "On the surface, this is very logical, but it will be extremely difficult to implement on the scale needed to make it affordable," Burns said.

Piedmont said if USI's initiative is successful in the CBA market, it could extend the service to the general book publishing industry. Traditionally, both CBA and general market publishers have handled returns in-house, although Simon & Schuster told PW it began outsourcing returns to Arnold Logistics, in Camp Hill, Pa., at the beginning of 2002—a different model than USI's, but one Simon & Schuster is enthusiastic about. V-p of corporate communications Adam Rothberg told PW that since it's outsourced returns, "we've seen tangible benefits, both financially and process-wise." Rothberg said S&S has found significant savings in the new outsourcing and cut returns processing time in half. "We are also getting a lot more information about returns," Rothberg said. "It [the outsourcing] helps us with the reconciliation process and helps us provide accurate, high-quality royalty statements to our authors."