Between November 2019 and January 2020, shoppers across the U.S. bought a record amount of goods, about $1.1 trillion, approximately 5 percent more than in 2018 over the same period, according to Deloitte. This is good news for the fashion and beauty industry at large, however, there’s a growing problem in retail that may reach a crisis point in the coming months: product returns. Technology company Optoro predicted $100 billion worth of returns from November 2019 to January 2020, which is a 6 percent increase from last year's prediction ($94 billion).
While buying pants or coats online is a snap for consumers, unlike trying clothing on in-store, it’s much more challenging to find the right size and fit. However, during a global pandemic, product returns are just another in a series of challenges that brands must deal with. The closure of physical stores due to COVID-19 has been a big blow to some retailers. For digital-first fashion and beauty brands, however, it’s been “business as usual” more or less, with many focusing on adjusting their marketing strategies to address the shift in consumer behavior brought on by the pandemic, including “shelter in place” policies which forced most of us to spend more time at home.
Now that most of the U.S. and countries across the globe are starting on the cautious journey towards getting back to business, retailers are busy restructuring their policies to ensure the safety of customers and employees, while also engaging customers — online and offline — to get their business back on track to profitability.
Beyond the complexities of reopening stores and ensuring the safety of both staff and customers, brands are faced with additional complexities related to product returns:
- Minimal access to dressing rooms: Ironically, one of the safeguards to decrease the spread of the virus — dressing room closures — will also undoubtedly accelerate the product returns problem. The inability to try on merchandise in-store forces shoppers to take their best guess at whether a pair of pants or a blouse might fit, sometimes buying items in more than one size, only to bring back items that don’t fit.
- Return stockpile: When normal life stopped and stores closed in response to COVID-19, merchandise that would have been returned was stashed away in trunks and closets. Many stores, including Kohl’s, even extended the time frame for returns by 30 days (from the usual 180 days) to accommodate customers. Although it’s too early to say for sure, there could be a massive amount of product returns as a result of return “hoarding.”
- Return quarantine: Safety must always come first, so even product returns must be “quarantined” before being put back on the shelf. This decreases the possibility that the virus is passed along to employees or shoppers, but also delays the revenue stream from the re-sale of returns.
Technology Innovations That Curb Product Returns
In recent years, technology companies have stepped up to offer creative tools that help shoppers determine whether merchandise will fit. Augmented reality (AR) and virtual reality (VR) are just two technologies that brands are employing for sizing purposes. For example, ASOS’ “See My Fit” allows shoppers to view an outfit on 16 different body shapes, helping consumers to determine what the item might look like on themselves.
Personalization technology also excels at enabling brands to do a better job of helping their customers find the ideal style and fit through the use of “experiences” designed to assist shoppers, and increases the likelihood that they will be satisfied with their purchase. These five straightforward personalization strategies are designed to increase customer satisfaction, decreasing the potential for unhappy customers and product returns:
- For new visitors, or customers who have previously returned an item, prompt them with a notification on site to show them a size guide and give them more information about how the products are made and the sort of "fit" they can expect.
- On the checkout page, if a visitor has two products in their basket but of different sizes, maybe one is a 12 and one is a 14, alert them as this could be a mistake.
- For known customers, use predictive analytics to pre-select products in their size. By using past browsing, purchases or even returns data when the visitor hits the product detail page, pre-select the item in the size they most commonly purchase. To increase the likelihood of conversion, add a low-stock notification as well — e.g., “four of these are left in your size.”
- For repeat customers, it’s possible to predict the probability of that person returning a particular product, and then suppress that product line in your product recommendations. For example, if a customer consistently returns T-shirts, you can suppress this item from product recommendation carousels or the offers you send that individual.
- Customer data can also be used to serve a variety of personalization to improve the customer’s on-site experience, such as pre-filtering category pages and alerting customers when an item in their size is available in a store nearby or likely to sell out soon.
If a customer does return a product because it doesn’t fit, the brand can use strategies that focus on retention. By identifying when a customer who has returned an item lands back on site, automatically triggering a “Welcome Back” message with a recommendations carousel will help re-engage that customer and help them to find other items they’ll be interested in.
This is where the use of technology like personalization comes in handy. Customer data can be used to get to know customers better, as well as engage with them on a regular basis. Using data from previous purchases can actually help guide every new shopping experience, assisting customers in finding the right products in the right sizes.
Out of all of the challenges brands are faced with right now, decreasing product returns may not be at the top of the list. However, the goal is to enhance the overall shopping journey, and a happy customer translates to less returned goods back on the shelf and higher profitability for brands. That's some good news we can all get behind.
Julia Fearn is vice president, customer success at Qubit, a personalization software provider.