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LEAD Innovation Blog

Read our latest articles on innovation management and innovation in a wide range of industries.

Date: 10-May-2019
Posted by: Daniel ZAPFL

How return quotas in the textile online trade will be reduced in the future

 

Returns are part of the business model in online trading. Simple return options and free returns were introduced from the outset as an incentive to buy and are now an essential criterion for many online shoppers when making a purchase decision. Almost all large online retailers therefore grant their customers generous goodwill arrangements. The downside is the cost of handling returns, which are enormously high, especially in the textile online trade. The following is a brief overview of the current situation and three innovative approaches to reducing return quotas.


 

High return rates in online textile shopping

According to the study "E-Commerce Austria 2018", almost 5 million Austrians made purchases in domestic and foreign mail order and online trade during the 2018 analysis period, spending a total of around 7.9 billion euros. On average, just under one fifth of the products ordered are returned.

The fashion sector in particular is affected by a large number of returns. Here, the return rate even amounted to around 54 percent. One reason for this is that many customers order their clothing online in several sizes. And the rate is growing even further as a result of mobile shopping. This is because consumers who order on the move tend to make impulse purchases and often already regret purchases when they come home.

Trend Collection Textile

 

The most common reasons for a return are that the item does not fit (71 percent), does not fit (44 percent), is faulty (42 percent) or does not correspond to the description/image (40 percent).

gruende rücksendungen

Germans are also increasingly sending their Internet purchases back to online merchants. According to Bitkom, every eighth order comes back on average - 20 percent more than two years ago. In the shoe and fashion sectors, up to 80 percent of goods are being returned. Above-average return users are 14- to 29-year-old online shoppers as well as women who return every seventh purchase to the online retailer; for men it is about every tenth purchase.

 

Returns reduce profits

For online retailers, returns not only mean a loss of sales, they also cause personnel and process costs in order to check the return and return it to the warehouse inventory. This can be particularly problematic for smaller retailers, as the cost per return tends to be higher for them than for large suppliers such as Amazon or Zalando.

According to the EHI study "Dispatch and returns management in e-commerce 2018", the average cost of a return is estimated at 10 euros.

In addition, not all returns can be processed in such a way that they can be put back on sale. Dealers often resell returns to returns buyers, sell them at reduced prices, donate them to non-profit organizations, put them into staff sales or destroy them.

eh studie retourwaren

 

 

Innovative approaches to reducing return rates

For these reasons, online retailers are very interested in reducing the number of returns - through more precise product information, photos or even virtual changing rooms. As a result, many retailers now not only specify the sizes of clothing, but also make 360-degree pictures, close-ups and videos available to customers. Below we present three innovative systems that will be used in the near future to reduce returns.

 

1. 3D Body Scanner in Branches

In the future, mobile body scanners that create a personal avatar for virtual fittings in the web shop could be a solution for the massive returns problem in the textile online trade. One of the first online textile retailers to implement this concept is Hervis. In cooperation with start-up Texel, full-body scanners are to be installed in the stores in 2019 to produce a digital body model of customers.

Once created, the customer can retrieve his avatar online, try on clothes and order the right size right away. Hervis hopes that this will reduce the number of returns of clothing in online shops and save return costs. At present, around one third of orders are returned, as Hervis Managing Director Alfred Eichblatt reveals.

2. 3D-Body Scan with the Smartphone

Another interesting innovation for reducing response rates is the interactive and personalized 3D body model of the Tech Start-up Fision. A mobile body scan, size recommendations, a virtual showroom and a virtual dressing room allow "custom fitting" in the web shop. Returns due to a bad fit or wrong size should be a thing of the past.

With only two photos and supported by artificial intelligence, the Fision Body Scan App creates a personal 3D body model of the online shopper within seconds. All the customer needs is a smartphone. The created model then forms the basis for further body-related applications.

For example, the body measurements derived from this can be used as a starting point for made-to-measure services or for calculating individual size recommendations. In the Fision Virtual Dressing Room, different styles in different sizes can be tried out on your own 3D body model - in real time and in augmented reality. In the future, it will be possible to try on and order clothing three-dimensionally from the comfort of one's own home, without having to worry about fit and size.

 

3. Social Shopping in the 3D Webshop

The Tübingen-based start-up acameo is showing an alternative way to the previous online shop systems. The digital company recently presented its highly reactive 3D web shop CUUUB®, which opens up new possibilities for smaller retailers in particular. With this innovative e-commerce solution, retailers can present their own stores in 3D on the Internet and serve customers worldwide.

In order to depict the real business in detail, it is completely scanned with NavVis trolleys and then offers the web shop visitors a realistic shopping experience as a digital twin. The customer can view individual products online from all sides and receives product data and customer ratings. In addition to the shopping software, acameo offers modules for sales consulting and guided tours. Live tours with video transmission are also possible.

A further tool is the real-time chat function "Social Shopping", which visitors can use to exchange information with friends while shopping. Products can be directly commented on, jointly evaluated and purchased. Such a shop can be a replacement or an add-on for an "ordinary" shop.

CUUUB-Website

© acameo, Demo of the 3D webshop solution CUUUB

 

Conclusion: 100 percent delivery rate in online shopping

The return rates are enormously high, especially in special product groups such as clothing, and are increasing from year to year. Young online shoppers in particular make extensive use of returns. The best return is therefore the one that does not arise in the first place. The more information there is about an article, the better the customer can assess the product and the fewer returns there will be. Virtual avatars and augmented reality applications represent a starting point in this respect for significantly reducing returns in the future due to a lack of fit or not liking.

Trend Collection Textile

Daniel ZAPFL

Born in Graz, Austria. After positions as project manager & head of innovation of the project management at LEAD Innovation, Daniel Zapfl has been responsible for the success of the innovation projects of our innovation partners since January 2018.

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