Brace yourself for ‘Return-uary’. How best can retailers protect profit margins amid a tidal wave of returns?

It’s that time of year, dubbed Return-uary by analysts, when ecommerce retailers brace themselves for a tsunami of returned golden-quarter goods.

The Royal Mail predicted that on January 2 alone online returns would spike by as much as 72%, compared to the average number of returns per day in December.

It’s a huge challenge for retailers who have to shoulder the cost of reverse logistics, with analysts such as B-Stock suggesting as much as £60bn of products are returned to UK retailers every year, about £21.2bn of which is sent back between January and March following the Christmas period.

Online retailers such as Asos have attempted to stem this flood by changing their returns policy to deter ‘serial returners’, with the worst offenders having their accounts deactivated. Serial returners include shoppers who repeatedly buy and wear clothing once, before returning them for a full refund.

Reducing retail return rates

However, retailers who target the root causes of returns, further upstream in their value chain, are arguably taking a more holistic and effective stance on return rates.

Clothing fit is a huge challenge for online fashion and footwear retailers and a major trigger for returns. This problem is exacerbated by a wide variation in size interpretation between and even within brands’ inventories. That’s why leading retailers and brands in this sector are turning to fit solutions powered by artificial intelligence (AI) to provide a solution.

Sports brand Asics, for example, has recruited AI experts True Fit to boost conversions and cut returns. The move has successfully cut customer size sampling by 50%, reduced returns by a fifth and trebled conversion rates among solution users. Other brands reporting a significant reduction in returns after using True Fit’s solution include Kate Spade, UGG, Clarks and Kenneth Cole.

Using artificial intelligence to cut returns

The beauty of AI solutions like True Fit’s is that they also deliver highly granular personalised recommendations based on customers’ previous purchasing habits. This means that customers are much more likely to browse and buy items that they will keep and love. This approach not only reduces the burden on a retailer’s reverse logistics chain, but it also helps to nurture customer loyalty and advocacy.

Augmented reality (AR) is another breakthrough technology that’s helping retailers tame the returns monster. Enhanced product visualisation solutions like AR take much of the guesswork out of buying a product and ensure customers have a better idea of what they’re going to get, thus cutting returns.

Argos, for example, is among those who have harnessed the power of Apple’s ARKit and Google’s ARCore to produce AR functionality for their smartphone app which enables customers to see what products look like in their home. Products covered by Argos’ app range from furniture and consumer electricals through to Lego sets.

How conversational commerce can help

Developments in conversational commerce are also enabling ecommerce retailers and brands, such as Lacoste, L’Oreal and Decathlon, sell the right products to the right customers, and significantly reducing return rates in the process.

Leading conversation commerce solutions, like those offered by iAdvize, now harness artificial intelligence to automatically identify high-value, high-intent customers and then enabling them to chat online in real time with a human third-party product expert to ensure they make the right purchase. This approach helps to spot repeat purchasers and ensure they buy and keep their online orders rather than return them.

What is clear is that ecommerce returns are here to stay. However with the right mix of technology deployed at the right touhpoints throughout the customer’s online journey to purchase, returns can be minimised, while customer loyalty and retailer profits can be protected.

 

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