Can the metaverse solve retail’s returns challenges?

Discussion
Source: “The Metaverse and How We’ll Build It Together” - Meta
Jan 14, 2022

We’ve seen a lot of press about the volume of returns that are pouring in from this holiday season. When you combine sustained high rates of online shopping with a really strong holiday season for many retailers, an overwhelming amount of returns seem inevitable.

While retailers can do things to try to cut their cost of returns — emphasizing return to store, offering incentives to turn a return into an exchange or an expanded sale, etc. — the best way to reduce returns is to prevent them from happening in the first place.

In fashion, the biggest reason consumers return items is because of fit. We’ve even invented terminology to describe the behavior: wardrobing (effectively the opposite of showrooming, where consumers order additional things to try on at home and send back what they don’t want), and bracketing (the practice of adding multiple sizes of the same item to your cart, a sure signal some of them are coming back).

Retailers and tech companies have made a run at fit tech for years, using any combination of computer vision, predictive analytics and proprietary algorithms that define everything from fabric fall and flow to how to translate cut patterns into 3D objects that can be sized against a body.

The challenge for consumers has always been the on-ramp. You either have to answer a 500-question survey about what brands you like, what sizes you wear in those brands and various body measurements or shape assessments, or (somehow worse) you have to climb into a box and get a total body scan à la airport scanners.

But augmented reality breakthroughs are starting to make it easier for consumers to get over the body scanning hump. Companies like Eclo (focused on shoes) can take you on a guided tour of your feet using only your phone’s camera. Other fit tech companies are experimenting with front view and side view full-body pictures (taken in tight fitting clothes like workout clothes) as the only requirements to be able to predict fit. Companies like Stitch Fix are introducing customers to the confidence that comes when they get recommendations, not only for products, but the size of product to buy.

As the metaverse becomes more pervasive, it’s an easy shift to move your full-body avatar, built from two simple phone pictures, into virtual reality to try on clothes in full 3D. It may seem far out there, but when retailers need to find a way to solve the huge problem (returns) that is created by consumers trying to solve a simple need (buying the right size with confidence), there is high likelihood that things will move fast. Certainly, the volume of returns is unsustainable as it is.

DISCUSSION QUESTIONS: Will the metaverse finally bring fit tech to the fore and solve retailers’ online returns problems? Do you think that newer AR-driven (simulated try-on) or AI-driven (analyzing past purchases) solutions are already showing promise?

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Braintrust
"In a virtual world it is hard to envision people using accurate avatars of themselves rather than a version of what they wish they were."
"Meta in Greek means “beyond,” but it sure doesn’t mean “the answer to all our problems.”"
"There is a long way to go to prove if this will be the technology that finally helps reduce returns."

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19 Comments on "Can the metaverse solve retail’s returns challenges?"


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David Naumann
BrainTrust

I haven’t personally tried an augmented reality/AI app to predict my size, but the metaverse concept that only requires two photos is intriguing. As Nikki mentioned in the article, returns are a huge issue for retail and the wardrobing practice is a reality that exacerbates the increased returns for online purchases. While there is no silver bullet, augmented reality and metaverse apps can hopefully minimize the volume of returns caused by fit issues.

Jennifer Bartashus
BrainTrust

In a virtual world it is hard to envision people using accurate avatars of themselves rather than a version of what they wish they were. Retail stores in metaverse landscapes like The Sandbox, Somnium Space or Nifty Island are still nascent. As for using 3D-rendering technology via phones and apps, there are use cases but the challenge is to make it simple and compelling for consumers. Will some customers see the benefit of doing an accurate body scan to virtually try on clothes? Sure. But until there is a real incentive for the consumer to use it, it is difficult to see the returns landscape changing. Right now the returns issue is more of a retailer problem than a consumer problem. Retailers have focused on making returns easier – which is now a headwind to changing shopping behavior to reduce that burden. To force a change in behavior, retailers may have to do new things – like offer free returns only on items tried on virtually, or extra discounts for using the technology.

Ken Morris
BrainTrust

As much as The Company Formerly Known as Facebook would like this to be today’s reality, we’re (thankfully) a long way from general acceptance of VR goggle usage. Meanwhile, wardrobing and bracketing will be the go-to methods for trying things on. I love these two terms, but I’m not sure one solution fits all. I have tried a service called Son of a Tailor and they worked great from only a very short questionnaire, and I will use them forever. I believe a combo will work best, but bracketing is the cost of doing business and won’t go away.

There is, of course, affordable technology that can already drastically reduce returns and return fraud. It’s called RFID. With its serialization capability, RFID acts much like a VIN number to validate and returns readers to create a frictionless process. You can change behavior by creating frictionless processes.

Lee Peterson
BrainTrust

Meta in Greek means “beyond,” but it sure doesn’t mean “the answer to all our problems.” Remember when Prada and Levi’s put “fit machines” in their stores about 20 years ago? Too early. To me fit is SO nuanced, there’s at least 40 different measurements involved (sadly, I know this). I’m afraid it’s going to be hard to rely on the beyond world to help solve this issue. Seems more like the cost of doing business going forward. I.e.: having to figure out how to make up for it elsewhere.

Suresh Chaganti
BrainTrust

AR/VR has great potential to reduce returns. But it takes a lot of effort and it is category-specific. Home decor and furniture need accurate in-room visualization. Colors and fit need to be shown accurately for clothing and apparel. Installation videos for furniture, electronics, and kitchen appliances will help a lot. In short, technology like Metaverse is just an enabler, and businesses still need to do the heavy lifting.

Some of the issues around returns are self-inflicted. Policies like two-way free shipping, “try many and keep only what you like” will encourage excessive returns. Businesses make easy returns one of the core benefits for consumers, but it is the biggest margin detractor.

David Spear
BrainTrust

Both AR- and AI-driven solutions have come a long way over the years, and I do think these technologies are providing measurable progress with sizing concerns. But they’re not pervasive enough today to deliver material impact to the number of returns that retailers will face in 2022, which I predict to be unusually high. But progress is being made with innovative technologies for both the front-end ordering and back-end returns process. I’m especially excited about retailers embracing AI-infused analytics for merchandise returns. Attacking both sides of the equation should result in significant improvement.

Melissa Minkow
BrainTrust

The metaverse will definitely help marginally with returns, but there’s more to the equation than just whether or not something fits. “Fit” to consumers is also about how the item sits, how the item appears when photographs are taken of them, what other pieces within the shopper’s closet the item goes best with, and how the item moves in different scenarios. The metaverse will have to capture all of these aspects to make consumers fully confident in buying an item and not needing to return it after trying it on in real life.

Brandon Rael
BrainTrust

The promise of the personalization aspects that augmented reality will bring the retail shopping experience has been touted for years. While there is undoubtedly a lot of momentum and discussion about the monetization of the metaverse, there is plenty of work to do on the operationalization side of the true fit technology.

The reverse logistics challenges of online shopping have been there for years, and companies have attempted many different creative strategies to mitigate the high rate of product returns. True fit technology, powered by metaverse full-body avatars, is a potential solution to help manage the relentless returns. The full-body scanning capabilities are promising, and the post-purchase artificial intelligence analysis will be incorporated into the product development processes.

It will be interesting to see how this develops.

Bob Amster
BrainTrust

Realistically, we have seen technology applied for palpable, high-value, practical purposes e.g. Uber. Unfortunately, some technology is being applied, or at least intended, for the cool factor. Metaverse, with a simpler moniker, would be great for virtual fitting and, thus, provide a way to reduce returns of online purchases, which is a real and costly fact of life for retailers today.

Andrew Blatherwick
BrainTrust

There is a long way to go to prove if this will be the technology that finally helps reduce returns. That is at least for the sizing element of returns. I’m not too sure about the rest as a lot of people still like to order different styles, colors, etc., and send back what they do not like, if not the entire purchase.

What is for sure is that retailers need to find some way of solving this problem as it is both economically and environmentally a major issue. When such a large proportion of ship-to-home purchases, which is already the most expensive channel, are returned, it is a major problem operationally, economically and environmentally. Will the environmental lobby get to this before technology does? We will have to wait and see but the next generation to come into major purchasing power seems to be much more aware than their predecessors and may just turn their back on this way of shopping given its very high cost to the environment.

Rich Kizer
BrainTrust

I think this is first of all a new playground where consumers will fire up and go overboard with purchases knowing they have an open door for returns. Will they come to the store with the returns? That is very likely. The excitement of visiting a well-merchandised store will never wane.

David Leibowitz
BrainTrust

Expecting 3-D and augmented reality to solve for the variety of sizes and interpretations by manufacturers would seem to be a monumental and costly challenge. And puts the onus for fit on the consumer.

I’d prefer to see a lower tech solution — a standard for sizing in the industry, with adherence by suppliers. Standard sizing exists for footwear and intimate wear. Though not perfect, it’s a lot better than the simple buckets we currently have across S-M-L-XL in apparel.

Doug Garnett
BrainTrust
10 months 20 days ago

Virtual reality is not reality. No clothing in virtual reality looks, drapes, or fits as it would in the real world. Colors are not accurate in virtual reality – even photos in online stores rarely capture color well. As a result, I cannot envision a major improvement in returns from shopping in the so called MetaVerse – and we need to beware of unintended consequences as it could even make things much worse,

Ryan Mathews
BrainTrust

In a word — no. AR/VR/MR tools can (today) only address the physical issues associated with “fit” and those only to greater or lesser degrees depending on the system. But it seems to me that the real problem area is emotional/psychological “fit.” Ask anyone who has ever worked in a shoe store. People will often tell an associate their “size,” force their feet into shoes that are clearly too small, and buy them. Now, these shoes can’t be comfortable any more than ill-fitting bras, men’s suits that are “slim cut” on bodies that aren’t, medium or large sweaters on XL or XXL torsos, etc., but they sell because they “psychologically” fit the customer. I have been a big AR/VR/MR advocate for decades, but even I don’t think technology can bridge the physical versus psychological size gap.

Mark Price
BrainTrust

I am dubious about the potential in the short term for the metaverse to impact consumer behavior at retail or through e-commerce, due to the slow adoption rate of artificial reality technology. That technology is likely 3 to 5 years out before there would be widespread adoption.

The AI driven solutions, analyzing past purchases that consumers retain and do not return in order to better predict the fit of new items, is very promising and can be done using the technology that exists today.

Brian Cluster
BrainTrust
High returns are some of the most nagging problems for retail. An article in CNN recently cited that returns will be $120B in the recently completed holiday season vs. sales of $789B — accounting for 15.2% of sales. Now that we have the 2021 holiday season behind us, what can retailers learn and improve? It falls in measures for prevention and partnerships and I think that metaverse is low on the list. 1) Prevention: Its’s time to dig into some data. What categories are performing the worst? Is there an 80/20 rule in categories, items, or even markets? What can you do from a data perspective to increase the number of images, add sizing guidelines, use review feedback to bolster your product data, and share downstream to your PDPs and on-shelf? AI customized sizing solutions, as well as international size standards, will also play a role in prevention. 2) Partner: As you dig into the data above, there may be some suppliers that have a unique sizing for their products in a category. Which suppliers… Read more »
Janie
Guest
10 months 18 days ago

Lots of interesting points here, Nikki. Thanks for the insightful article. Making it easy and convenient for customers to “on-ramp” to fit tech is really the key to scaling the usage and impacting returns in a way that matters. It also has to be accurate. AI Body Modeling company Bold Metrics just launched its Body Data NFT™ technology so it’ll be interesting to see how that pans out with Metaverse usage and AR/VR.

Oliver Guy
BrainTrust
Oliver Guy
Global Industry Architect, Microsoft Retail
10 months 17 days ago

I have told this story many times – it dates back to 1994 when I attended a lecture by Dr George Stelios who was Professor of Clothing Technology at the University of Bradford.
He talked about each of us being scanned and being able to see exactly what clothes looked like on a screen (words like avatar & mixed reality were not part of the lexicon then).
Once we were happy the clothes would be ordered and manufactured to fit you perfectly. This was in the days before much of clothing manufacturing moved East – however many of the principles could have a huge impact on returns while also improving rates of returns.

Anil Patel
BrainTrust

The Metaverse is a fantastic opportunity for retailers. And, when used correctly, it has the potential to solve a wide range of issues for retailers. However, when it comes to fashion returns, the problem is a little more complicated than just the size and color of the dress.

Customers have a preconceived notion of how they will appear in a certain piece of clothing. Whether or not to keep a fashion item, will totally depend on how their avatar appears in that outfit vs how they will actually look after wearing them in the real world.

Moreover, customers’ Avatars in Metaverse are not going to define customers’ appearance with 100% accuracy as people have a distorted perception of their physical appearance.

AR-driven and AI-driven solutions do seem promising in reducing returns. Currently, customers can feel the lack of uniformity among the same size of different brands.

In order to reduce product returns, I would suggest the fashion industry to:

  • align with their customers’ evolving body types and size specifications
  • implement more realistic size measurements.
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Braintrust
"In a virtual world it is hard to envision people using accurate avatars of themselves rather than a version of what they wish they were."
"Meta in Greek means “beyond,” but it sure doesn’t mean “the answer to all our problems.”"
"There is a long way to go to prove if this will be the technology that finally helps reduce returns."

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