Reduce Returns, Increase Profits: An AI-Powered Fix for Small Garment Manufacturers and Brands
| Aug, 24 , 24
How many have you faced the frustration of handling high return rates for your garments? Low return rates can be challenging for small garment manufacturers and brands. With return rates for garments as high as 88%, it is clear that this issue is not just an inconvenience—it is a significant business challenge that impacts your bottom line.
Online shopping offers unparalleled convenience and choice. However, it has also brought new challenges for small garment manufacturers and brands. One of the most pressing issues is the high rate of returns, which can lead to increased costs, logistical headaches, and a damaged brand reputation. In this increasingly competitive market, finding potent solutions to reduce returns is crucial for survival and growth.
We will explore how AI-powered solutions can help small garment manufacturers and brands reduce garment returns, improve customer satisfaction, and boost profitability. By leveraging AI, you can gain deeper insights into customer behavior, enhance the shopping experience, and streamline your operations, all while reducing the number of returned items.
Let us look at a few compelling stats about returns in the garment industry before we move further:
Online Apparel Returns: The average return rate for online apparel orders remains stubbornly high, hovering around 24.4%. It is a significant increase compared to the overall return rate of 10.6% for all goods.
E-commerce Dominance: Online shopping has fueled the returns, accounting for nearly 25% of the total return volume. The convenience of online returns and the practice of ordering multiple sizes or styles contribute to this trend.
Financial Burden: In 2020 alone, American consumers returned a staggering $428 billion worth of goods, with apparel retailers bearing a disproportionate share of the burden.
Environmental Impact: The environmental consequences of high return rates are substantial, with approximately 10% of all returned goods ending up in landfills. It highlights the urgent need for solutions to reduce returns in the apparel industry.
Now that you know the impact of returns on various levels, let us dive deep.
The Need to Reduce eCommerce Returns
The Return Problem:
The return rates in eCommerce, particularly for garments, are staggeringly high. According to recent statistics, 89% of shoppers have returned an online purchase in the last three years. While the return rate for items bought in physical stores hovers around 8%, this figure skyrockets to around 88% for online purchases. It means they return one in every four items. For small garment manufacturers and brands, these return rates are more than just numbers—they represent lost revenue, increased costs, and potential damage to brand reputation.
Impact on Small Businesses:
The impact of high return rates is more pronounced for small garment manufacturers and brands. Unlike significant corporations, small businesses often lack the financial cushion to absorb the costs associated with high return rates. These costs include the logistical expenses of processing returns, the potential revenue loss, and the strain on customer service teams handling return-related inquiries and complaints.
Moreover, frequent returns can lead to a negative customer experience, further damaging your brand’s reputation and reducing customer loyalty. For small businesses, where every customer counts, the consequences of high return rates can be particularly severe.
Now that you know the impact of high returns, let us discuss each issue to clarify further.
Why Reducing Returns is Crucial for Small Garment Manufacturers and Brands
Financial Implications:
High return rates directly impact the financial health of small garment manufacturers and brands. Every returned item represents a lost sale, and the costs associated with processing returns—such as shipping, restocking, and potential refurbishment—can quickly add up. Additionally, frequent returns can lead to overstocked inventory, further tying up capital and resources you could have utilized elsewhere.
Customer Experience and Retention:
In the highly competitive world of eCommerce, customer experience is everything. When customers frequently return items, it is often a sign of their unfulfilled expectations, whether due to issues with sizing, fit, or the overall quality of the product. Each return is a potential lost customer, as buyers with a poor experience are less likely to return for future purchases. Reducing return rates is not only about saving money—it is about enhancing the overall customer experience and building long-term loyalty.
Operational Challenges:
Handling returns is a time-consuming and resource-intensive process. For small garment manufacturers and brands, the operational burden of processing returns can be overwhelming. It includes coordinating with shipping partners to inspect returned items, restocking inventory, and issuing refunds. The more returns you have, the more resources are diverted from other critical business functions, such as product development, marketing, and customer service.
You must have understood the grave issues. Now, we can discuss the solutions.
AI-Powered Solutions to Reduce Garment Returns
On-Model Product Imagery:
Enhanced product imagery is one of the most effective ways to reduce garment returns. AI can create on-model product images that accurately depict how garments look on different body types. You can reduce the likelihood of returns due to fit or style mismatches by offering customers a more realistic view of the product.
AI-powered tools can generate broad product images, showcasing your garments on models of different sizes, shapes, and skin tones. It helps customers make more informed purchasing decisions and enhances the overall shopping experience, leading to higher satisfaction and lower return rates.
Virtual Dressing Rooms:
Another innovative AI-powered solution is the virtual dressing room. These tools allow customers to virtually try on clothes before purchasing, helping them visualize the garment on their body. By simulating the experience of trying on clothes in a physical store, virtual dressing rooms can significantly reduce the chances of customers buying items that don’t fit or suit their style.
Virtual dressing rooms use advanced algorithms and machine learning to create accurate, personalized simulations based on the customer’s body measurements and preferences. This technology enhances the shopping experience, more accurate purchases, and fewer returns.
Personalized Recommendations:
AI can also help reduce returns by providing personalized product recommendations. By analyzing customer data—such as past purchases, browsing behavior, and feedback—AI algorithms can suggest products likely to meet the customer’s needs and preferences. It reduces the likelihood of returns due to dissatisfaction or mismatches between the customer’s expectations and the product they receive.
Personalized recommendations can also help you upsell and cross-sell complementary products, increasing your revenue and enhancing the overall customer experience.
Let us look at how EverLighten used AI to reduce returns.
Case Studies: AI Success Stories in Reducing Returns
EverLighten Reduces Returns with AI-Enhanced Imagery
EverLighten, a small garment manufacturer, successfully reduced return rates by implementing AI-powered on-model product imagery. Customers can better understand how the garments would fit and look on different body types with the help of these tools.
The results were impressive—EverLighten saw a significant decrease in return rates, increased customer satisfaction, and higher sales. Brands appreciated the improved accuracy of the product images, which helped them make more informed purchasing decisions and reduced the likelihood of returns.
Example 2: Virtual Dressing Room Success for a Small Manufacturer
This AI-powered tool used advanced algorithms to create accurate simulations based on each customer’s unique body measurements and preferences.
As a result, EverLighten experienced a substantial reduction in return rates as customers were more confident in their purchasing decisions. It increased customer engagement, as they enjoyed the interactive experience and felt more connected to the brand.
However, it is not all rosy. Let us discuss a few roadblocks in implementing the solutions.
Obstacles facing small garment manufacturers and brands
Integration Costs:
While AI-powered solutions offer numerous benefits, consider the initial costs of implementation. The upfront investment in AI technology can be significant for small garment manufacturers and brands. However, consider this investment a long-term strategy that can lead to substantial savings by reducing return rates, improving customer satisfaction, and increasing sales.
Technology Adoption:
Adopting new technologies can be challenging, especially for small businesses with limited resources. Integrating AI into your operations requires careful planning, training, and adaptation. Your team will need to work with AI tools, and existing workflows may need to be adjusted to accommodate the new technology.
However, the long-term benefits of AI adoption—such as reduced returns, improved customer experience, and increased profitability—make it a worthwhile investment. By taking a strategic approach to AI implementation, you can overcome these challenges and position your brand for future success.
Balancing Costs and Benefits:
When considering AI adoption, weigh the costs against the potential benefits. While the initial investment in AI technology may be high, the long-term savings and increased revenue from reduced return rates can more than offset these costs. Additionally, AI-powered solutions can help you stay competitive in an increasingly digital marketplace, where customer expectations are higher than ever.
By carefully assessing your business needs and selecting the right AI tools, you can achieve a balance between costs and benefits that supports your long-term growth and success.
Now that you know the roadblocks and their solutions. We go into the future trends.
Future Trends: The Evolution of AI in Reducing Garment Returns
Emerging AI Technologies:
As AI continues to evolve, new technologies promise to reduce returns. For example, improved fit prediction algorithms can provide customers with even more accurate sizing recommendations, reducing the likelihood of returns due to fit issues. Similarly, AI-driven customer feedback analysis can help you identify common reasons for returns and address them proactively.
By staying at the forefront of these emerging trends, you can continue to enhance your operations and reduce return rates, ensuring long-term success for your brand.
Long-Term Benefits:
The long-term benefits of AI adoption are clear—reduced return rates, improved customer satisfaction, and increased profitability. By leveraging AI-powered solutions, small garment manufacturers and brands can address the immediate challenges of high return rates and position themselves for future growth and success.
As the eCommerce landscape continues to evolve, AI will play an increasingly important role in helping brands stay competitive and meet the ever-changing demands of customers.
Conclusion
High return rates are a significant challenge for small garment manufacturers and brands, impacting your bottom line and customer satisfaction. However, you can reduce returns, enhance the customer experience, and boost profitability by leveraging AI-powered solutions such as on-model product imagery, virtual dressing rooms, and personalized recommendations.
If you want to reduce garment returns and improve your business’s bottom line, it’s time to embrace AI-powered solutions. At EverLighten, we specialize in helping small garment manufacturers and brands enhance quality and customer satisfaction and drive growth. Whether you’re new or established, our team of experts is here to guide you every step of the way.
Don’t let high return rates hold your business back. Connect with EverLighten today to learn how we can help your unique needs and take your brand to the next level.
FAQs
- How can AI help reduce garment returns for my small brand?
AI can significantly reduce garment returns by providing more accurate product representations through on-model imagery, offering virtual dressing rooms to help customers visualize how garments will fit, and delivering personalized product recommendations that align with customer preferences.
- Are AI solutions for a small garment business expensive to implement?
While initial investment in implementing AI solutions is significant, the long-term benefits—such as reduced return rates, improved customer satisfaction, and increased sales—often outweigh the costs. Additionally, AI technologies have become more accessible and affordable for small businesses in recent years.
- How do virtual dressing rooms work, and how can they benefit my brand?
Virtual dressing rooms use AI algorithms to create accurate simulations of how garments will fit on a customer’s body based on their measurements and preferences. This technology allows customers to “try on” clothes online, leading to more accurate purchases and fewer returns. It also enhances the shopping experience, making your brand more attractive to potential customers.
- What are the challenges of integrating AI into my garment manufacturing process?
Integrating AI into your garment manufacturing process can present challenges such as upfront costs, staff training, and adjustments to existing workflows. However, you can manage these challenges with careful planning and a strategic approach. The long-term benefits of AI adoption, such as increased efficiency and reduced return rates, make it a worthwhile investment.
- Can AI help with trend forecasting for my brand?
Yes, AI can analyze vast amounts of data to identify emerging trends, helping your brand stay ahead of the curve. By leveraging AI-driven trend forecasting, you can develop new product lines that resonate with your target audience and reduce the risk of returns due to outdated or unpopular designs.
- How does EverLighten support small garment manufacturers in implementing AI?
EverLighten offers tailored AI solutions for small garment manufacturers and brands. Our team of experts works closely with you to understand your specific needs and challenges. We provide end-to-end support, from initial consultation to delivery.
