Retailers Enlist AI in Fight Against Returns

livemint.com:

Apparel and fast-fashion brands such as Perry Ellis and H&M are turning to a new weapon in the fight against costly online returns: artificial intelligence. They are using AI to sharpen product descriptions and recommendations, steer certain ads away from shoppers most likely to return those products, and aim advertising toward consumers they believe will hold on to their purchases. “What we can’t do is stop Amazon letting somebody purchase.

But what we can do is boost the targeting for the audiences that we think are less likely to return," said James Poll, chief technology officer at Acorn-i, an e-commerce agency whose clients include Perry Ellis. Returns are a blight to online retailers: They need to make the process smooth enough to encourage sales, but prevent the cost of returns from swamping their balance sheets. Return-processing costs as a percentage of overall sales in 2022 held roughly even from the year before at 16.5%, according to the National Retail Federation.

But the problem has grown more pressing as inflation crimps both consumers’ wallets and retailers’ bottom lines. The impulse looks like it’s here to stay. Seventeen percent of American consumers surveyed in June and July said they had returned at least six items over the past six months, a jump from 7.1% the previous year, according to logistics software company Narvar.

People who shop the most also tend to account for more returns, presenting another conundrum for retailers, experts say. Some companies have responded with strictly analog solutions. Online retailer Dress the Population, for example, gives discounts to people who agree not to return their purchases.