What: Fashion brands are experimenting with alternative methods to reduce e-commerce returns without losing customer loyalty.

Why it is important: Returns of online fashion orders in the US incur around USD 25.1 billion in processing costs so retailers are making the process more difficult for customers.

Of the 72% of Americans who made an e-commerce return and believed the process was harder than usual, 91% said that the ease of their returns experience affected their willingness to shop with the retailer again.

Retailers are trying methods of social conditioning to incentivise the behaviours they want. For example: waiving the return fee if the customer is willing to change their return to exchange or receive store credit instead, setting a minimum annual spend to receive free returns the next year, or setting a nominal fee (percentage of the sale) for the return.

Brands are also considering the logistics of the returns. A Turkish brand, Bocan Couture, offers free shipping to customers but asks customers to pay to return products and offers an exchange rather than a refund. Zalando has a high return rate of 50% so its stores products based on the likelihood of the returned items being sold into a different region using a proprietary algorithm.

Poor sizing is the leading reason for returns so Zalando for example is using an AI tool that gives customers size recommendations for specific clothes by using predicted measurements from photographs. In addition to this, previous customers can also provide information about the fit of the garments. The company is now developing a 3D try-on experience.

After reconsidering free returns, fashion brands get creative