Online Returns: Impacts of Customers’ Love for Free Returns and How Some Fashion Retailers Are Finding Ways to Limit Them

70% of online returns for apparel are due to poor fit, Free delivery and free returns as the norm in the e-commerce industry has resulted in a significant increase in returns in the last 2 years. While free returns are a huge convenience for customers, it is a hard bullet to bite for brands and retailers, which could be cracked using technology and smarter solutions.

Returns are getting out of hand (no pun intended)

Online shopping has gained tremendous popularity over brick-and-mortar retailers thanks to its incredible convenience. It enables customers to buy from anywhere. We now have fast deliveries and let’s be honest, free returns make it risk-free. Online shoppers can’t look, feel, nor try products as if they were at the store, so returns are the safety net that one would have if he or she tries the product in a fitting room. Consequently, online retailers are seeing a significant increase in the volume of goods being returned, going over an average of 30% within the apparel industry. Shopifiy has evaluated that return deliveries will cost a staggering $550 billion by 2020 in the U.S. alone.

Returns are expensive for online brands and retailers because businesses not only need to account for the cost of logistics but also costs of inspecting and repacking the products. Amazon has reportedly spent $6.6 billion on delivery in 2014, but only received $3.1 billion in shipping fees. This is a major challenge and the fact that most retailers won’t openly talk about it tells you how big of a problem it is.

Why returns are big problems for online retailers?

For some retailers, dealing with the cost of returns can equate to 16% of total revenue. Apart from losing sales plus the additional cost of processing, the returned items usually are resold at a discounted rate resulting in lower profits. Last year, Revolve’s customers reportedly returned $385 million worth of merchandise out of $400 million net revenue in 2017.

Returned goods also poses an environmental concern: when products are returned, it increases their carbon footprints. Especially in the fast fashion environment where the sales cycle per product is much shorter, returned items that can not be sold again often end up in landfill and waste.

How some retailers address the problem of returns

The Old Way

  • Tightening returns policy and blacklisting customers
    Some online stores such as Amazon and ASOS have tightened their returns and refund policy amid the rise of “serial returners”, inflicting huge costs and savages retailers’ profits. But this response has upset their customers whose accounts have been blacklisted, and voiced their dissatisfaction on social media.

ASOS return policy

Backlash from customers on social media in response to ASOS’s tightened return policy.

Image credit

Using technology to reduce returns:
There are solutions that are trying to address the sizing and fit issues in the fashion industry from different angles, from size recommendation tools to shape-shifting mannequins for manufacturers to produce clothes that fit different bodies.

Types of solutions

  • TrueFit – offers an online tool where customers can specify their personal sizes and compare to other customers ordering the same sizes.
  • 3D Look – lets shoppers provide their own measurements and adjust the apparel’s pattern to their desire.
  • MySizeID – has an app that allows customers to create their own online profile with personal measurements to get the right fit.
  • Human Solution’s iSize – allows designers to access the body dimensions, sizes tables of different demographics for fashion designers to adjust and optimize their fits.
  • Bold Metrics – predicts and recommend the best fit for their customers body sizes.
  • Euveka – developed a biomimetic and connected robot-mannequin that shape-shifts, allowing designers to create garment prototypes that fits different sizes.

The challenges of these solutions are that they are very dependent on data: data of the customers is analyzed versus a set of data such as returns, and measurements of the clothing. However, the apparel industry is notoriously inconsistent. These data input is erratic, there are numerous mistakes of the customers. These hinders the best tools from delivering good recommendations.

The Newest Ways“See it in your size” functionality on e-commerce websites
Some of the most prominent digital native brands such as Universal Standard, Thirdlove, Showpo, Good Americans, have adopted the “see it in my size” feature on their e-commerce website where a customer can select to see an item on a model of her size. Literally, there is an image for each product, in each size carried by the brand, by a model of the appropriate size. As a result, customers of different sizes can relate to the products, and see what it would like on someone of their sizes and make a confident buying decision. This “see it in my size” feature is increasing conversion rates by improving the customer experience and reduces the rate of returns.

But, this solution requires each product to be worn and photographed in models of different sizes which is a huge undertaking. The content production studio has to multiply its operation by the number of sizes that are shown on their websites. While it might be do-able for a brand with a limited number of new SKUs per year, it is challenging to achieve for brands with more than few hundreds of products per year.

Fortunately, A.I. image-creation solution can help to produce images for “See it in your size”
Super realistic computer-generated images have been created with A.I using GAN (Generative Adversarial Network). These images are almost undetectable from images taken with a camera.

In the image below, all the image were computer generated apart from the top row and left row.

Image credit: The Verge

It will not be too long until its commercial application in the fashion industry. From creating images of products just from a snapshot of what a celebrity is wearing, to creating fake models in different poses. It is a fantastic solution but it is still in its early stage, images are not without flaws, and images are limited to low resolutions and not to mention very expensive.

There are a few A.I. image creation solution such as Allure Systems with high quality and resolution image that helps retailers creating images that resonate with customers of diverse shapes, body sizes and ethnicities in a scalable and cost-effective way.

Images created with Allure Systems. None of the models ever worn this outfit.

With more images showing different fit for different sizes, images become more relevant to the customers. Customers feel empowered when they see a model in their size when they shop. They can make confident and well-informed decisions when they buy the outfit, they will look good because they already know how it looks on them. Ultimately, this helps prevent returns at its source, due to poor fit, also improve the shoppers’ experience. And happy customers are likely to be return customers as they gain confidence that the product will match expectations.   

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