How do we do an exchange / return on our website?

[ElmStreetToys]

I'm running into this issue more often now that our website is picking up more orders.  I need to be able to do exchanges easily with our site. An example would be the following.............

Customer needs to replace a broken toy with another one, just a simple even exchange that also keeps our inventory counts correct

Now I'm also needing the option to provide the customer with a return prepaid shipping label from our store that we send to them via email so they can print it at home and send the package back to us.

Another second option we need is to print prepaid shipping labels to put with my online orders for returns when we ship them the first time. I would like to make it where I can put the label in their shipment and it only be charged if used or have a link on my site where they would be able to put in their order number in and the items they would like to return or exchange and be able to print their own return label.