Retailers experience $260.5bn in global returns annually

Retailers experience $260.5bn in global returns annually

Sizing inconsistencies and the growth of online shopping have exacerbated the rising number of apparel items that are returned each year. But a report suggests the application of new technologies could be the answer to solving this dilemma.

Online shopping is estimated to be worth US$294bn a year in the US alone, according to in-store analytics specialist RetailNext, while eMarketer estimates online sales will be worth $3.5 worldwide by the year 2020.

Meanwhile a report looking at consumer returns, published by Retail Equation and the National Retail Federation, estimated retailers experience $260.5bn in global returns annually.  Offline returns are thought to average around 10%, online purchases around 20%, and "expensive" online purchases are returned up to 50% of the time. 

The numbers have prompted apparel intelligence firm Fashion Metric to take a closer look, with its white paper 'Why Apparel Return Rates Are So High' finding consumers have begun to expect easy, free returns. Indeed, it says a new phenomenon has taken hold – "the bedroom as a changing room" – as consumers ignore confusing sizing charts and buy extra sizes with the intention of returning what doesn't fit.

The paper's author, Third Wave Fashion, says the lack of sizing standardisation (and the increasing ubiquity of vanity sizing) has created an enormous impact on bottom lines since consumers started buying clothes online. 

"It's clear to see how sizing inconsistencies and uncertainty are driving massive rates of apparel returns," the report explains. "When sizing varies so wildly from brand to brand, shoppers experience a high degree of uncertainty. And consumers are not just returning more, they are changing their behaviour in other ways as well."

It adds: "With the constant changing size and fit landscape in e-commerce, consumer expectations have evolved too. While progressive retailers and brands are realising the benefits of offering easy, free returns, we are seeing consumer trends that are beginning to change the entire ethos of online apparel shopping."

To combat this, the report suggests that technology can help brands and businesses offer more accurate information about size and fit.

For example, machine learning algorithms can enable brands to help shoppers more easily find the answers to their fit questions. Smart businesses are also helping shoppers determine their size through technology: by asking shoppers simple questions, and then applying in-depth data science to offer intelligent recommendations.

The report suggests technology that acts as a brand translator, such as comparing product sizing to a favourite shirt in a shopper's closet, has the "ease-of-use factor" that can be appealing to shoppers. 

But, the authors add: "We've seen how difficult it is to maintain accuracy over time, since sizing in brands changes, often seasonally. Additionally, many brands can have multiple fits even within a garment category. Using technology can be the best move for retailers, but it has to be chosen and implemented in an intelligent way – one that both works for shoppers and stands the test of time. 

Fashion Metric is a SaaS solution for apparel retailers and brands to gather intelligence about their customers and personalise the online apparel shopping experience. Its Virtual Sizer technology outputs clothing size recommendations for brands and retailers to power data-enriched consumerb experiences.

Recent predictions by retail data intelligence specialist Clear Returns found that in the UK, shoppers will return around one in five – or 20% – of products bought over the four-day internet shopping frenzy from Black Friday to Cyber Monday. This ties stock up in the supply chain and is estimated to cost retailers GBP245m in refunds, cost of returns and good being out of stock.

Returns cycle clogging up the holiday supply chain