For any merchant, returns are a necessary and expected part of running a business. Last year, customers returned $428 billion in merchandise or 10.6% of all retail sales. In ecommerce, the problem is even bigger, with as much as 15% to 40% of all ecommerce purchases being returned.
15% to 40% of all ecommerce purchases are returned
One of the most common reasons for a return is that the product isn’t quite what the customer had expected or hoped for. In ecommerce, the customer doesn’t have a chance to view the item in person before purchasing it, so they’re even more likely to end up disappointed with what they receive.
But new innovations in ecommerce technology can help you provide your customers with an experience as close as possible to the in-store experience. Using augmented reality (AR) technology in your ecommerce experience enables customers to visualize a product in their own space, helping them get an accurate understanding of whether it’s the right purchase for them. That can have a big impact on reducing return rates: Shopify found that merchants who use 3D AR visualization strategies have seen a 40% reduction in returns since implementing the technology.
Let’s take a deeper look at AR technology in ecommerce and how your brand can use it to provide a great customer experience and help reduce customer returns.
Using augmented reality in ecommerce
More customers are shopping online than ever before, with the percentage of customers preferring to shop via mobile phone for non-food items jumping from 30% to 45% since the start of the pandemic. And these customers are interested in using augmented reality to help them visualize where and how the products will fit into their lives: Google found that 66% of customers say that they are interested in using AR to assist them when shopping.
Unlike virtual reality, which offers a truly immersive experience in a virtual world, augmented reality works by superimposing digital images on real-world environments within a camera, video display, AR headset, or pair of glasses.
In the world of ecommerce, most AR technology is delivered on the company’s website or via mobile applications on smartphones or tablet computers. Customers can point their phone or tablet camera at a physical space to understand how a product would fit in there, or even turn the camera on themselves to understand how the product would look on them with a digital makeover.
By having the opportunity to place a product in a real visual context, consumers have the opportunity to decide if it’s the right choice for them, the same way they might if they saw the product in a showroom or had the chance to try on a piece of clothing.
Take a piece of furniture, for example. AR technology can show a customer how a couch they’re considering would fit inside a room, helping them avoid the inconvenient and costly mistake of ordering an item that’s too big for a given space. They can also use the technology to digitally stage a photo of a room, helping them see how a combination of pieces would fit together.
By enabling customers to have more confidence in their purchases through 3D visualization, they’re more likely to make higher-value purchases in the first place and to purchase multiple complementary items—and they’re less likely to return those items.
Four ecommerce brands making an impact with AR
Let’s look at how some best-in-class D2C brands are using AR technology to improve the customer experience.
1. Warby Parker’s Virtual Try-On
Warby Parker, the D2C eyewear brand, has offered a home try-on service for years, enabling customers to try out a few different sets of glasses in the comfort of their homes before committing to a purchase. But recently, they’ve supplemented that with a Virtual Try-On service that uses augmented reality to allow customers to “try on” glasses using the brand’s mobile app. Customers can select different frame options and turn on their camera to see how the glasses look on them. As well, they can move their heads from side to side to see how the glasses look from different angles. They can tap on the screen to change the color of the frames instantly. The Virtual Try-On service gives customers an accurate sense of how they’ll look in a certain set of frames, which will help them to narrow down their home try-on options, or even have the confidence to commit to a specific pair without a home try-on—reducing the likelihood of returns.
2. Home Depot’s AR Product Viewer
The home improvement giant Home Depot got its timing right, rolling out AR capabilities within its app and mobile website mere months before the pandemic struck and shoppers overwhelmingly moved from physical retail to ecommerce. The app enables a customer to pick a specific Home Depot product and use a 3D visualizer to view it in their own space, or to choose a paint color to see what it would look like on their walls. The visualizer has been a powerful tool for influencing sales: Home Depot says that customers who use the AR feature typically convert to purchase at a rate two to three times higher than those that don’t.
3. Ulta’s GLAMLab Virtual Try-On
It’s hard to get a feel for a new beauty product without having a chance to try it out, but Ulta’s GLAMLab helps customers give themselves virtual makeovers using only their smartphones. With the app, customers can try out different product looks using their camera. They can see how the products will appear on their faces, giving them an opportunity to test out that new shade of red lipstick or get matched with the right shade of foundation. Users can also try out various styles of false lashes, different hair colors, and brow shapes and styles. The app makes it easy to decide which products customers would like to try at home, and also provides great inspiration for those planning a visit to an Ulta Beauty Bar, so that they can choose the right look in advance.
4. Kohl’s Virtual Closet
The department store chain Kohl’s teamed up with Snapchat in 2020 to develop an augmented reality “virtual closet,” where Snapchatters can browse Kohl’s clothing selection to mix-and-match items to see how they appear together, and use a Selfie Lens to virtually try on a Levi’s trucker jacket. This was an ideal way for Kohl’s to reach a younger audience, as 75% of 13- to 34-year-olds are active Snapchat users, and they were able to engage with the brand and make purchases without even leaving the app.
All of these brands have been able to use AR to effectively engage their customers on a deeper level, leading them to new product recommendations and helping them visualize and connect with the products in a way that wouldn’t be possible without 3D technology. That can lead to higher purchase rates—and a lower return rate, as we’ll discuss in more detail.
Using AR technology to increase purchases and lower return rates
By empowering your customers with tools that help them understand what a product looks like in a real-world setting—whether that’s lip gloss on their mouth or a lamp in their living room—they’ll be more invested in the purchase when they make a buying decision.
For example, while a shopper might otherwise consider purchasing a sweater in a few color choices to see how each one looks with the rest of their outfit, a customer using a virtual closet shopping tool can assemble outfits virtually to get a better understanding of what they like before they hit the “purchase” button.
This means that customers are dramatically more likely to make a purchase: retailers that use AR technology see a 19% increase in customer engagement and a 94% increase in conversion rates for customers that engage with the AR tools. Deloitte even found that 40% of shoppers would pay more for a product if they were able to test it with AR technology.
Retailers that use AR technology see a 19% increase in customer engagement and a 94% increase in conversation rates for customers that engage with AR tools
And because customers can feel confident that their purchase matches with expectations, retail studies across the board are finding a dramatic decrease in return rates for purchases that were supported by AR technology. Shopify saw a 40% decrease in returns; SeekXR reports a 25% decrease; and Build.com reports that AR-assisted shoppers return 22% fewer items than non-AR shoppers.
By incorporating virtual “try before you buy” options, D2C brands can provide a superior customer experience that helps showcase your products in the best possible light without actually seeing or testing them at a store or showroom. Customers will be likely to explore a wider range of products, spend more time on your app or website, and make more purchases while returning fewer items—a win-win on all counts.
Want to learn other ways to lower your return rate? Just get in touch with our team.