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Return Reduction is the hot topic at 2022 The Lead Summit

By Kristopher Fraser

Jul 18, 2022

Fashion

Image: BCG PR

Returns are the bane of most retailers’ existence. On average, retailers expect to get back about 16.6 percent of the total merchandise customers purchase, according to CNBC. While a certain number of returns are built into most retailers' business models, the lower return rates are, the better a company’s bottom line is.

This year at the 2022 The Lead Innovation Summit, an annual retail tech conference, the hot topic among retailers and retail tech companies is return reduction. Tech companies are getting innovative with how returns are handled.

Greenlist describes itself as a peer-to-peer return company. Rather than returns going directly back to a store or warehouse, they are sold to another consumer at a price with some level of markdown.

“Through using our software, companies can save 20 dollars per return,” A representative for Greenlist said to FashionUnited. “Shipping costs, employee time, and packaging are all reduced. Peer-to-peer returns also help guarantee the merchandise was sold. A lot of retail returns actually don’t get sold again, or if they do the profits are only pennies on the dollar. Greenlist sells at all possible prices, and retailers never see the product again. Reducing packaging also helps reduce carbon emissions, aiding companies in sustainability.”

Other companies, like Treet, are helping brands build their own resale channels as an answer to reducing return rates. “Resale is becoming the secret weapon for support teams dealing with return requests outside of return policies. Brands, like Sozy, encourage their customers to list their items on their dedicated resale site powered by Treet or return for 110 percent of the selling price in credit back to the brand,” said Yulia Vereshagina, director of marketing at Treet, to FashionUnited.

In addition to resale, fit technology is also a key investment for retailers looking to reduce return rates. MySureFit’s patented AI sizing and visualization technology is setting it apart from many of its competitors, providing 99 percent accuracy and eliminating multi-size ordering for shoppers. The app walks users through how to take a picture to predict their measurements and sizing. Within 20 seconds, the photos are uploaded into a database, sizes are calculated, and consumers are ready to shop.

For e-commerce channels with MySureFit technology integrated, customers can also treat online shopping like a virtual fitting room as they work to replicate what MySureFit’s president of marketing and brand integration David Cunningham described to FashionUnited as “shopping with your girlfriends.”

Virtual fitting rooms

“We don’t own inventory, or get credit for sales made using our app,” Cunningham said to FashionUnited. “What we do get is massive amounts of data that gives us information on not only consumer shopping patterns but also the sizing and how the sizes work for them. We also identify the need for us to get information from customers, so we offer them a 25-dollar store credit to use, and if they register and put their photo into a database, we offer them an additional 50 dollars, so they are incentivized up to 75 dollars to use our technology.”

On the other end of the delivery spectrum, there are companies working to improve the post-purchase logistics for global retailers and make bending the rules or exploiting loopholes in return policies preventable. Narvar is one such company that’s worked to make returns more convenient and personal by adding additional checkpoints to returns and offering loyalty incentives.

“Reducing return rates is one of the biggest growth areas in the retail industry right now,” said Narvar CEO Amit Sharma to FashionUnited. “If you are a VIP customer, you might get more time to return. What’s important now is figuring out ways to personalize the return experience. The question is how retailers can use experiential ways to provide a personalized experience where shipping and returns come into the picture.”

Narvar recently launched a courier dispatching service for delivering and returning items to handle the process in a much more sustainable fashion, reducing packaging and carbon emissions. Reducing return rates is also a more eco-conscious approach to fashion, as it reduces packaging.

There are many emerging trends in retail technology right now, but reducing return rates seems to be this season’s gold medal winner. Brands will continue trying to leverage their capabilities to manage their business and use technology to meet consumer experiences and expectations.

Innovation
Return Rates
The Lead Summit