Virtual fittings, rentals to reduce returns

With the holiday and Christmas shopping season approaching in just over two weeks, retailers are gearing up for another annual event for consumers: the returns season, which typically begins in early January then. may the glow of holiday happiness diminish.

After the holiday season last year, 63% of consumers said they plan to make returns, according to a PYMNTS study, with one-third going inside the store to make the return and 31% using a postal service. Another 21% used a drop-off point designated by the merchant.

In 2020 overall, consumers returned $ 428 billion in merchandise in 2020, according to the National Retail Federation, accounting for about 10.6% of all retail sales made. This rate of returns was in line with other recent years, although online returns more than doubled between 2019 and 2020.

Read more: 2020 holiday shopping retrospective report

Since then, many retailers have actively looked for ways to reduce the number of returns to be processed, as reverse logistics can become costly for merchants. Some, like Gap, have embraced virtual fittings, allowing customers to use augmented reality (AR) to see what an item might look like. Others, including Rebecca Minkoff, Banana Republic, and Express, use clothing rentals, which allow people to try on clothes for a short time for a small fee before committing to keeping them in the closet.

Clothing rentals and virtual fittings can also help reduce “bracketing” or the practice of ordering multiple sizes of a product with the intention of returning ill-fitting items. Studies have shown that 62% of online shoppers admit to having ‘bought in series’ at least once in the past year.

Related news: MySize CEO: ‘Free Returns’ Retail Model Not Viable

Beyond clothing, several electronics brands are also implementing software that detects when a consumer encounters a problem that could lead to a return and helps remedy it.

“We want to have a situation where for each problem, the consumer obtains an immediate solution from the product he is using” Tsiki Naftaly, co-founder and co-CEO of Copilot, told PYMNTS.

Also see: 65% of consumer electronics returns occur during setup

No you keep it

But even if a customer wants to return an item, whether because of quality issues, improper sizing, or some other reason, some retailers may decide it’s easier – and cheaper – to just pay for the. customer to keep the item. Earlier this year, Amazon and Walmart began telling customers to keep unwanted items rather than returning them while offering a refund, using artificial intelligence (AI) to reduce work and costs for businesses. The option is also determined on a case-by-case basis, based on the customer’s purchase history and the cost of processing the return.

Read more: Ignore it: Amazon and Walmart ask consumers to keep unwanted gifts

And while that could mean a customer is left with something they no longer want, it doesn’t seem to bother them – it’s the money that matters. PYMNTS data shows that offering discounts as low as 5% could persuade 39% of consumers to keep vacation purchases they intended to return, and a 30% discount would be enough to prevent nearly 60% buyers to return items.

You may also like: 51% of consumers would keep products for discounts

Additionally, consumers may ultimately be able to make a profit on items returned by merchants but not returned. Second-hand platforms like eBay, Poshmark, Craigslist, and Facebook Marketplace allow people to sell directly to each other, with new, unpackaged items often fetching much higher dollars.

Fight against fraud

Retailers should also be wary of fraudulent returns in which a customer returns something that is not eligible for return, either outside of the policy window or because an older item has been exchanged in the inbox. instead of a more recent purchase. PYMNTS research, conducted in conjunction with Forter, found 44% of retailers experienced return abuse in the past 12 months, and 66% of businesses said it got worse over the year. elapsed.

The National Retail Federation estimates that nearly 6%, or $ 25.3 billion, of returns made in 2020 were fraudulent.

More details: Merchants lose 2% of their sales every year due to abuse of the return and promotion policy

Yet retailers are inclined to make the return process as easy as possible, even if it means accepting an increased risk of fraud. David Morin, senior director of retail and customer strategy at Narvar, told PYMNTS that “it’s really essential for retailers to think about how to make the overall experience as easy as possible, as smooth as possible. and as transparent as possible ”.

“Because a lot more people try new brands, they’re probably going to try more feedback experiences, and having that really seamless experience builds that confidence and that peace of mind,” he added.



On: This report represents the inaugural edition of the TechREG ™ Chronicle. The regulation of digital companies appears to be one of the key issues of our time. Through this new publication, we seek to contribute to the debate and discussion about when, how and when not to regulate digital businesses and the key technologies they use.

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