AI Helps Retailers Turn Tide in the Battle of Returns

The new year is only three days old.

Buyer’s remorse may be setting in for those of us who have hit “buy” again and again, and maybe bought duplicate items in different sizes, hoping that the perfect fit would arrive on the doorstep and counting on the convenience of returns to send back any unwanted purchases. 

The malaise of retailers — we’re talking here of returns — never really goes away. The holidays only serve as a year-end reminder of the fact that shoppers have the option to give back what they do not want and get their money back, denting merchants’ top lines.

Higher Returns From eCommerce Sales

It’s hardly a “holiday problem,” if we might use that term. The National Retail Federation said in its recent year-end report that $743 billion in merchandise was returned in 2023 — equating to an overall return rate of 14.5%. 

Online sales, the NRF reported, see a higher return rate, with 17.6%, significantly higher than the 10% rate for brick-and-mortar sales.

The best way for merchants to fight returns is to dissuade consumers from making the returns in the first place – and those efforts are being aided by advanced technologies, specifically artificial intelligence (AI).

The fact remains that the brick-and-mortar experience is one that is inherently tactile, where a consumer is able to experiment, in person and in real time, with what looks and feels right. Walking out of the store with items that have been examined and tested reduces the likelihood that consumers demand they be taken back.

As PYMNTS reported, Zalando debuted a digital body measurement tool in July to help customers determine their clothing size using just two photographs of themselves. Elsewhere, virtual try-on initiatives have been launched by Maison Valentino, powered by augmented reality firm Wanna.

Beyond the confines of web-based “try before you buy,” actual supply management is paramount.  Amazon has begun to use AI to spot damaged items before they are shipped to customers, cutting back on inevitable returns down the line. 

The AI-powered solution is trained with photos of undamaged items so that it can identify damaged ones, according to the report. The technology is added to an imaging station that the goods already move through that confirms that the proper items for an order have been picked. If the AI identifies an item as broken, the item is diverted to a worker who will double-check the product.

Online fashion retailer Asos detailed on its recent earnings call that AI has been enlisted in the bid to examine returns data to identify items and brands that have a high incidence of returns and to make tailored recommendations that improve the customer experience. 

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