Many retailers are striving to tackle the issue of product returns, which is considered one of the biggest challenges facing the sector. According to estimates from the National Retail Federation, 15.8% of annual sales are expected to be returned in 2025, resulting in losses estimated at $849.9 billion. In this context, startups in artificial intelligence have begun developing new technologies aimed at reducing this percentage.
The popularity of AI applications that offer virtual try-on technologies is on the rise, allowing users to virtually try on clothes before making a purchase. These applications aim to reduce uncertainties related to sizing, which is the main reason for product returns.
Details of the Event
The new technologies being developed include the ability to create a “digital twin” of the user, enabling realistic clothing trials. For instance, the platform Catches has been launched, allowing users to virtually try on clothes with high accuracy in simulating fabrics and their movement.
Ed Vois, founder of Catches, states that this technology relies on modern techniques that make it possible to provide a more accurate and realistic shopping experience. He also noted that these solutions could lead to a significant reduction in return rates, helping companies improve their profit margins.
Background & Context
Since the beginning of the last decade, tech companies have attempted to solve sizing issues in online shopping, but the rapid advancements in artificial intelligence have made these solutions more effective. With the increase in online shopping, product returns have become a major challenge for many companies, especially with growing uncertainties about sizing.
Data shows that the millennial generation (Gen Z) is leading this trend, with shoppers aged between 18 and 30 averaging around eight online returns. These figures highlight the urgent need for effective solutions to address this phenomenon.
Impact & Consequences
The problem of product returns is a significant challenge affecting company profits. According to Simeon Siegel, managing director at Guggenheim, proactive use of technology can be an important driver for businesses. Moreover, AI technologies are not only limited to reducing returns but can also enhance the shopping experience.
Companies are now moving towards strategies that combine technology with new policies to protect profit margins. These strategies include imposing fees on returns and providing more accurate information about sizing.
Regional Significance
In the Arab region, where the e-commerce sector is experiencing rapid growth, these technologies could be particularly beneficial. With the increasing reliance on online shopping, these solutions may help improve consumer experiences and reduce costs associated with returns.
Arab companies can leverage these innovations to enhance their competitiveness in the market, contributing to improved financial performance and increased customer satisfaction.