(NewsNation) — The era of free returns may soon be on its way out, as a growing number of retailers adjust their policies to what consumers have become accustomed to.
Macy’s, Abercrombie, J. Crew and H&M are among the companies that have increased shipping fees for mail-in returns, CNN reports.
According to Happy Returns, 81% of merchants started charging for at least one return method in the past 12 months, “primarily to help reduce return rates.”
Retailers are increasingly looking for ways to save costs, a strategy that can come at a price.
A November survey found that 48% of consumers returned at least one gift in the past year, and 40% said they would return at least one or more gifts this year. Almost a third (31%) said they are specifically making returns part of their shopping strategy.
Companies have to cover shipping costs to process returns, and products often end up in retailers’ warehouses or on store shelves at a discounted price, CNN reported. Products may also end up in liquidation warehouses or landfills. All of this reduces the company’s bottom line.
To reduce costs, businesses can turn to artificial intelligence to cut this type of profit before a shopper checks out.
A McKinsey study found that 70% of returns in fashion categories are due to size, style and fit issues. RetailWire reported that AI technology could be used to improve recommendations at the point of sale.
The idea is to deploy AI for a better, more sophisticated shopping experience so people can check the fit of items and see how they like them before adding them to their cart.
According to RetailWire, MySizeID, Volumental and ShoeAI are all helping online retailers find the right products for customers. Stitch Fix uses AI-powered algorithms to make product recommendations, while Amazon and Shopify have also used AI tools to reduce profits.
Reverse logistics can also be expensive, as SupplyChainBrain explains.
“One of the biggest factors is that the current supply chain is only efficient in one direction, and problems start when trying to move goods backwards,” wrote contributor Heather Hoover-Salomon.
While outbound shipping can be streamlined, “return goods are hardly the same.”
“Retailers have to manually inspect each item before restocking, as many will not be returned in good enough condition to be resold,” Hoover-Salomon wrote. “Large items, especially furniture, are nearly impossible to restock after assembly. A recent survey showed that 68 percent of large items returned received at least 50 percent of their original sales price. I fail.”
AI can be a solution here as well.
According to SupplyChainBrain, “One of the main reasons reverse logistics is currently too expensive for retailers is that very few processes can be automated.” “This is what separates normal shipping costs from returns, and should be the first priority for supply chain professionals analyzing how to solve retailers’ return problems.”