AR/VTO - The Secret to Reduced Returns?

Returns are a common aspect of retail and eCommerce businesses, affecting both brick-and-mortar stores and online retailers. They’re also a common aspect of eCommerce and can have a significant impact on businesses both positively and negatively. On one hand, a well-managed return process can increase customer satisfaction and loyalty, leading to repeat business and positive reviews. On the other hand, a high rate of returns can result in financial losses and decreased customer satisfaction. The good news is, we’ve got the perfect solution for you! With Augmented Reality and Virtual Try-On technologies, returns are made more scarce and are less prone to affect businesses. In fact, brands offering VTO see an average of 64% fewer returns.

Statistically speaking, at least 30% of all products ordered online are returned as opposed to a much lower 8.89% return rate for brick-and-mortar stores. So, how do returns affect retail and eCommerce businesses? And how does AR/VTO offset the negative consequences of high return rates?

How Returns Negatively Impact Businesses

According to the National Retail Federation (NRF), in 2022, $1.29 trillion of total US retail sales were conducted online, with approximately $212 billion of this amount being returned.In eCommerce, returns are a result of a variety of factors. Research reveals that the top reasons for returns are incorrect sizing & fit (70%), defective products (65%), or a mismatch between customer expectations (49%) and dislike for the product (32%). Returns can also result from factors that are outside the control of businesses and can negatively impact businesses in several ways, such as:

• Increasing operational costs
• Decreasing profitability
• Negatively impacting customer satisfaction
• Creating inventory management challenges
• Decreasing product availability

In numbers, this means - according to estimates - that the cost of returning a $50 product is approximately $33, which includes processing, transportation, liquidation losses, and product discounting expenses. Can you imagine how massive this is? In simpler terms, returns account for ⅔ of the revenue of the product. And that’s not even the tip of the iceberg. There is also a negative impact on the environment. In fact, it was estimated in 2020 that all returns produced 16 million metric tons of CO2 emissions and 5.8 billion pounds of landfill waste (10% of which was disposed of in landfills).

To mitigate the negative effects of returns, businesses must implement effective return policies and processes that are convenient for customers, maintain their satisfaction, and minimize financial losses.

How is VTO Changing the Future of Returns?

One way of combating high return rates is the integration of Augmented Reality and Virtual Try-On (VTO) technologies in eCommerce platforms. As we enter the era of VR and AR, it only seems fair we start harnessing these technologies into the retail sector. With the rise of eCommerce, AR & VTO technologies help reduce returns by allowing customers to virtually try-on clothing, makeup, and sunglasses and visualize home furniture/decor items in their own space before making a purchase. The implementation of such technologies can result in significantly reduced return rates; which is attributable to numerous reasons, including:

• Increased Buyer Confidence: By allowing customers to try on items virtually with exact size & fit, VTO technology can increase confidence in purchases, reducing the number of returns and increasing conversions
• Reduced shipping costs: By reducing the number of returns, AR/VTO technology reduces the shipping costs due to returned products.
• Reduced negative impact on the environment: By reducing the transportation and packaging waste generated by the return process.
• Improved customer experience: By providing customers with a more accurate representation of a product before making a purchase, AR/VTO technology can enhance the overall shopping experience, reducing the likelihood of customer dissatisfaction and returns.

Better product visualization: VTO technology provides customers with a digital-twin visual representation of a product, including accurate fit, color, and style, which can help reduce the number of returns due to product dissatisfaction.

To Sum it Up

Augmented Reality & Virtual Try-On technologies significantly reduce the number of returns made by customers. VTO allows customers to try on items virtually helping them make more informed purchasing decisions and reducing the likelihood of receiving a product that does not fit or meet their expectations. It can thus enhance the overall shopping experience and increase customer satisfaction.

As customers become more confident in their purchases, retail and eCommerce businesses will waste fewer resources shipping products, save on packaging costs, and hopefully, build a more sustainable environment for people to shop in. The new era of online shopping begins here…

Are you looking to upgrade your audience’s online shopping experience to a more engaging, interactive, and effective one? Schedule a demo now to learn more about how we can help you.