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Returns are called the dark underbelly of the supply chain. Handling the more than 500 million packages that flow back to them costs retailers $5 billion annually. Austin-based Newgistics, at the forefront of a growing field called reverse logistics, is out to make returns a little less dark with its SmartLabel. Retailers attach the preaddressed SmartLabel to the outgoing product. Consumers then slap the label on the unwanted gift and mail it to one of five regional Newgistics return facilities. A bar code containing the customer's data allows Newgistics to electronically notify the retailers in advance, starting the exchange process. Retailers such as J. Crew have seen 80% usage rates while saving about $5 in handling costs on each return. Newgistics makes money by charging retailers for each package; CEO Bill Razzouk won't disclose revenues for the four-year-old privately held firm, but says 70 million SmartLabels will deploy this year, double 2004's figure. —MATTHEW BOYLE