Introduction: The Rise of Constant Product Returns

The internet has revolutionized the way we shop. It’s given us the ability to browse hundreds of stores and thousands of products in minutes. It’s allowed us to select items that have been custom made and personalized for us. And it’s leveled the business playing field, allowing the smallest niche companies to compete with the largest brands in the world.

But this new online marketplace hasn’t come without drawbacks. Along with ushering in a golden age of consumer choice and unprecedented business opportunity, the internet has created a customer service monster.

According to recent statistics, shoppers return somewhere between 15% and 40% of the products they purchase online. That adds up to over 3 billion items each year. And most of these returns – 80% to be exact – aren’t due to defective products. They’re the result of consumers over purchasing, testing several options out, and returning the ones that didn’t work.

This is especially the case with clothing and fashion accessories, some of the most returned products out there. SaleCycle reports that 56% of clothing and 30% of fashion accessories purchased online are returned. Recent data shows that returns account for around 5 billion pounds of waste every year. Many of the shoes or dresses that are returned because they “didn’t fit” or “didn’t look quite right” don’t end up back in inventory. They’re shipped to landfills where they increase a business’s carbon footprint and further damage the environment.

Online purchases
Up to 40% of online purchases are being returned

High return rates are also common in the furnishings industry. In fact, some reports have shown that as much as 50% of expensive items like furniture are returned after being purchased online. This is a huge problem since these items are so expensive to ship.

And yet, this epidemic of product returns isn’t just harming the environment. It’s also doing damage to businesses’ bottom lines. The increasing logistics complexity that comes with processing thousands of returns has forced online retail companies to hire more workers, rent larger warehouses, and even establish new departments dedicated solely to dealing with the issues surrounding product returns. Research from Statista has predicted that return deliveries alone will cost businesses $550 billion for 2020.

How Businesses are Fighting Back Against Product Returns

As we’ve already noted, one of the major reasons that consumers return items is that they don’t like them. They see a stock product photo, make a purchase, and receive it, only to be disappointed that the reality doesn’t quite match the low-resolution image on the website. Or they choose a dining room table that looks like it will match perfectly from their monitor - but which looks completely different in the light of their home’s light fixtures.

This has led many online retail companies to get creative with how they market, showcase, and describe their products online. In particular, online retailers have resorted to the following tactics…

Improving Product Listings

Online retail companies have beefed up their product listings in a variety of ways, hoping consumers will make wiser (and less costly) shopping decisions.

Many businesses are revisiting their product visuals, choosing to hire a professional product photographer to create more, varied product images. Product descriptions are also getting overhauled, ensuring that every piece of key information is included in clear, understandable language. And eCommerce sites specializing in fashion are making sizing guides more comprehensive and visible, so consumers are less likely to order a wrong size.

A more detailed product listing can make the difference between choosing a wrong item that will be returned and choosing a product that will be used and enjoyed for years.

Making Customer Reviews Front & Center

Consumers consistently report that customer reviews play a huge role in whether or not they make a purchase. By encouraging and incentivizing customers to write helpful reviews, businesses can boost online sales and minimize the number of returns. This is especially true if a company uses a custom review form that asks customers to note any issues they noticed, such as designs, colors, or textures that differed from their expectations.

Taking Advantage of Video

Today, putting a video on a product page is just as simple as inserting a stock photo. Since videos offer consumers a far better look at products than static images or text, they are one of the very best ways to educate consumers about a product before they make a purchase.

While the above options are powerful ways to reduce return rates, recent advances in Augmented Reality (AR) technology have opened up an even more effective possibility: try-before-you-buy with Augmented Reality.

Try in your space Augmented Reality
View in your room with Augmented Reality (AR)

How Augmented Reality Reduces Return Rates

Over the past ten years, businesses have taken advantage of Augmented Reality to give customers a better look at products in their own space. By using their phone or tablet, shoppers can see a 3D model of a product, correctly scaled and placed in any environment they choose.

IKEA famously developed an AR app called IKEA Place that allows consumers to place virtual furniture in their home, enabling them to quickly and easily see whether a certain piece of furniture or home decor would fit a tight space or match the design of a room. As anyone might imagine, this ability to see products in position has been proven to decrease the likelihood of returning a product.

Placing virtual furniture in your space
Augmented Reality (AR) for eCommerce

Xootr, a fully online scooter company, uses AR to give prospective customers a 360 degree look at their products. Charlie Mills-Mateer, the manager of Xootr Australia & New Zealand has noted that “having the ability to view them in 3D and AR is a fantastic asset: although our customers cannot physically touch the scooters, they can load the model wherever they are and examine them by walking around them.”

Some companies are even giving shoppers the ability to try on shoes, glasses, and clothing using the power of Augmented Reality. AR technology has already had an impact on return rates. One report noted that “virtual fitting room by J.C. Penney in stores allows companies to significantly increase online conversion rate and reduce returns rate of products.”

After adopting “try before you buy” AR and VR product visualization, online retail giant Macy’s noted that their products return rates had decreased to <2 percent for these VR-assisted furniture purchases. The results are stunning, since the average furniture industry return rates are 5% – 7 %.

Reports show that by empowering customers with a more comprehensive look at products through Augmented Reality, and even giving them the ability to virtually try their products in their own space, online retailers don’t just reduce product return rates, but also increase the number of conversions that a business can make in the first place.

But Augmented Reality does more than increase conversions and reduce returns. It streamlines the whole purchasing experience. AR offers customers a greater level of confidence and a unique experience, which is a great way to build brand loyalty.

Finally, Augmented Reality can be used to reach out to previous customers as well as to those who are only part of the way down the sales funnel. Ecommerce companies can use the data from AR sessions to craft unique, personally-tailored ads that are more likely to connect with prospective customers. For example, a business could target someone with an ad that featured home decor that was perfectly matched for products they’ve previously purchased or browsed.

Enable Augmented Reality experience

While the largest eCommerce companies are scaling Augmented Reality use on their online stores and reducing their product return rates, many online retailers are just investigating Augmented Reality options.

Often, there is a false perception that bringing your products to Augmented Reality requires additional web development or separate extensions to be implemented, but in fact it is much easier.

It all begins with a 3D model creation. To produce high quality and photorealistic 3D models, you need to send a few product pictures and dimensions to your 3D modeling provider.

Once a 3D model is created and you have approved it, you need to embed the generated code to your product page. CGTrader offers a web-native Augmented Reality feature, thus no additional software or app is required (available with CGTrader’s Free plan). The process is similar if your online store is hosted on Wix, Bigcommerce or similar platforms. Shopify offers built-in support for 3D models and videos, thus you can easily embed your 3D models using the drag-and-drop function.

The Future of Augmented Reality for eCommerce

AR experiences are still the exception rather than the rule. However, the need for social distancing brought on by the COVID-19 pandemic could force businesses to move in AR direction faster than expected.

As Augmented Reality is combined with other tech advances like machine learning, even more possibilities will open up, including personalized recommendations and more. And AR won’t just be a part of eCommerce’s future. Augmented Reality can also be implemented in in-store applications, by quickly providing key data about a product based on its barcode, for example.

AR technology has the potential to completely change the way we do business, online and offline. And if online businesses use Augmented Reality wisely, they could almost solve their product return problem – one customer at a time.

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Augmented Reality: The Answer to eCommerce's Returns Problem

Haidi Kelly is the CMO at Modelry. Formerly at WeWork, Haidi loves the challenges the B2B space brings. Excited about the transformative power of digital assets and content in eCommerce, Haidi helps individuals, teams, and companies reach their full potential. In her downtime, she is also a foodie, world traveler, and enjoys live music.

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