DeliveryApp partnered with The Fashion Network and The Ecommerce Club, to share their same-day delivery solution for ecommerce at the Fashion Ecommerce Summit, in Manchester. Our board member Alex Vassiliev, previously from Alibaba, JD.com and Yandex, presented his expertise on retail returns. This blog summarises his presentation.
Returns are a problem for fashion brands and across the retail space. The paradox is clear: returns are costly for retailers, yet consumers expect them to be free, or at least low-cost and seamless. Returns in the UK are expected to cost brands £60bn and it is now estimated that 30% of all fashion products are returned. For many in the industry, this feels like an unsolvable problem. But the truth is, the landscape is changing, and innovative solutions are emerging that could transform how we approach returns.
Globally, the top four reasons for returns are:
Advancements in technology are offering new ways to tackle expensive retail returns. From social commerce to augmented reality, cutting-edge solutions are building consumer confidence in products, before they order them, enabling fashion brands to turn this challenge into an opportunity.
In this blog, we’ll explore some of the latest trends that are reshaping the returns process across the globe:
Each of these solutions holds the potential to reduce overall return rate and enhance the customer experience, if retailers are willing to think outside the box.
Throughout history, retailers have used entertainment and immersive experiences to drive sales. Today, this concept has evolved into what we know as social commerce – a powerful fusion of shopping and entertainment that’s changing the way consumers interact with brands. It is defined as the shopping format whereby customers buy products within a social media platform.
In just 3 years since TikTok shop launched in the UK, it has made significant strides. However, the phenomenon is miles ahead in places like China, where the social commerce market reached a staggering £532 billion in 2023. Some platforms in China reach 600 million users per month, with live streaming audiences growing to around 62% of the country’s internet user population. To put this into perspective, during its Singles Day event in 2023, Alibaba generated £8bn – almost as much as Walmart China’s total revenue for the year; £13bn.
The global live e-commerce market is projected to reach 3.5 trillion USD by 2031, with countries like India and Thailand quickly embracing this new form of retail. While it’s particularly popular with Gen Z audiences, it is comparable with traditional shopping methods among other audiences too.
Given the size and influence of social commerce, it’s crucial to consider its impact on retail, especially retail returns.
Some brands have seen a 40% reduction in returns from orders placed via live shopping. Here’s why:
Augmented reality (AR) shopping is rapidly transforming the way customers shop, offering a unique opportunity for customers to virtually try on products using their smartphone or other devices. For online retailers, AR has opened up a new way to engage customers, enhancing both the shopping experience and sales potential. 40% of customers would be more willing to pay for a product if they could experience it through AR and 71% would be more inclined to shop more frequently with retailers if they offered the tool.
The appeal of AR is more than a gimmick, it streamlines the shopping journey. Almost half of shoppers think using AR helps them to make faster and more confident decisions, reducing the time between browsing and final checkout.
From a business perspective, virtual try-ons are not only cost-effective but sustainable. Retailers have reported a reduction in content production costs by up to 20% since implementing AR. More importantly, they have seen reductions in return rates by 8% as the highly personalised nature of the shopping experience leads to more accurate purchases. Additionally, customer acquisition costs (CAC) can drop by 5% thanks to enhanced customer satisfaction facilitated by AR-enhanced shopping.
Size and fit issues are the leading cause of fashion returns, according to nearly two-thirds of all fashion returns in the UK. This figure rises to 54% among 16-24-year-olds. Tackling this issue requires solutions that build customer confidence in choosing the right size before they place their order.
Some companies are now leveraging AI size and fitting solutions to enhance their online shopping experience. These typically ask the customer for basic information such as their height, weight, gender and fit preference. The AI algorithm then uses images of models wearing garments and calculates up to 21 body measurements. Based on this data the system recommends the best size for each customer, aligning their unique body morphology with the retailer’s sizing model.
Whilst some are sceptical about AI sizing tools, fearing the risk of offending customers through inaccurate suggestions, some success stories are emerging. Brands including Moschino, Silbon and Canali have successfully implemented this solution with impressive results. Some have reported a 25% reduction in retail returns, along with significant increases in AOV and conversion rates.
Try-on-delivery is an innovative concept where customers order items, try them on when the courier arrives, and only pay for what they keep. If they don’t want the items, the courier immediately returns them to the retailer. First introduced by two major Russian retailers in 2011, this service has since become a standard delivery option in the country.
While this approach may feel far-fetched for the UK market, the results show benefits for retailers. For instance, return speeds are reduced by 7-10 days, streamlining the entire process and minimising product damage. Moreover, conversion rates can increase by as much as 30%, and repeat purchases by 5%, contributing to an average growth rate that is 15% higher and operational profits that are up to 30% greater for retailers offering this service.
The faster return cycle also means quicker stock turnover, allowing more effective inventory management and enhanced customer retention. However, try-on-delivery isn’t without its challenges. Some critics argue it could encourage customers to bulk order items they have no interest in keeping, leading to more inefficiencies. Despite this, the model demonstrates the bold, outside-of-the-box thinking required to address the growing issue of retail returns.
We all know that instant gratification is the name of the game in today’s retail landscape. This means that same-day delivery has shifted from being a luxury to an expectation. For fashion and apparel brands, it’s no longer optional. In fact, 22% of customers would abandon their cart if same-day delivery isn’t available. With retail giants like Amazon raising the bar, consumer expectations are higher than ever, and retailers must adapt to stay competitive.
But the benefits of same-day delivery go beyond customer satisfaction – it can also impact return rates. Research indicates that same-day delivery corresponds to an estimated 6.4% decrease in retail return rates. Whilst research on the impact of same-day delivery on retail returns is limited, several factors are believed to contribute to the decline:
For a deeper dive into the demand for same-day delivery and its infrastructure in the UK, explore our report, Is Same Day Delivery the Future of Ecommerce?
The issue of retail returns can feel like an endless headache, but as the landscape evolves, so too do the solutions. With returns costing an estimated £60bn annually, the need for innovative strategies is more urgent than ever. Yet, with the right mindset and adoption of emerging technology, this costly challenge can be transformed into an opportunity.
As explored in this blog, several key trends are making a significant impact:
These innovations are not only reshaping the returns process but also improving the overall customer experience. Retailers who embrace these trends and think creatively about the returns problem, stand to gain a competitive edge in a rapidly evolving market.
Ultimately, the retail returns issue may be complex, but it is not unsolvable. With the integration of forward-thinking strategies, the future of retail returns looks far more manageable – and even profitable.
If you are interested in finding out more about DeliveryApp’s same-day delivery solution for ecommerce brands, get in touch today!
