Fixing Retail’s Returns Problem by Cracking Down on Sizing

Stop me if you’ve had this problem before. You’re doing some online shopping and have found a new shirt or dress that's just perfect. You even pay for expedited shipping because you can’t wait to wear it and show it off to all of your friends. The day finally comes and the box arrives, but there’s one major problem — it doesn’t fit.

Welcome to online retail’s most prevalent problem — returns. The lack of a true sizing system results in buyer confusion and, often, the ordering of ill-fitting items. Then it’s the retailer that's left to pick up the tab for the cost of return shipping as well as resending a new item if it’s required.

Returns in online retail have become a costly issue for brands. Nearly 20 percent to 30 percent of online apparel orders are being returned (with 70 percent of those returns due to problems with fit), costing retailers anywhere from $3 to $12 per order. One study cites total expenses to e-tailers from apparel returns at $1.4 billion, roughly 2.5 percent of the total online revenue ($60B) of apparel and accessories in 2015.

Returns have become such an expensive issue we’ve begun to see legacy retailers change decades-old return policies in order to cut costs. For the last 100 years, L.LBean had accepted returns of basically any item, purchased at any time, with or without a receipt. But over the last five years, the company reported losing $250 million worth of returned items that could not be resold.

For as much money companies are making by shipping merchandise out to consumers, they’re losing a huge chunk when it comes back in.

Fix the Sizing Issue

Probably the easiest way to quell returns is to fix the overarching issue related to product sizing. Despite best efforts across the industry, there's no universal system that drops everyone into a guaranteed bucket for size. Where some retailers sell pants by waist and length, others tag them as small, medium or large, and there's no consistency across brand.

Fortunately, there's technology available to the market that would allow consumers to take their true measurements using a mobile device, which would then sync directly to a retailer’s sizing chart and only show the consumer items in a size that correspond to their exact measurements. This ensures a true fit and a correct purchase each and every time

There are other technologies on the market that guestimate your size based off of photos you submit, or that ask you to enter what you think your measurements are so they can recommend what will fit you best. There's also 3-D scanning, virtual try on, and other big data methods.

But this much is clear — the sizing and return issue has created a sizeable market opportunity for technology companies that can provide a solution that would enable retailers to recoup losses from product returns. As innovation continues, we should see retailers trying out these various solutions as a way to improve customer experience while also grow their own bottom line.

Ronen Luzon is the CEO of MySize, a developer of proprietary smartphone measurement applications.