How AI can reduce product returns by 2023

The artificial intelligence solutions (AI) are valuable in reducing product returns. Through the data analysis and the automated decision makingAI can improve the accuracy of the product recommendationsoptimize the customer experienceto improve the description and optimize the return process. 

Some industries where you can see the greatest benefits of AI solutions in reducing returns are e-commerce, retail, manufacturing and customer services. However, to implement AI in your company and reduce product returns, you need to have the data, the right technology infrastructure, a skilled team, a solid business process, an implementation platform, effective communication and engagement, and regular evaluations.

How can Artificial Intelligence solutions reduce product returns?

Return rates on the rise, study finds Online Shopping in Spainand artificial intelligence can help reduce product returns in a number of ways:

1. Improve accuracy in product recommendation: The use of machine learning algorithms can help improve product recommendation to customers, which can reduce returns due to unwanted products or products not suited to the characteristics and interests of each buyer.

2. Return data analysisArtificial intelligence helps analyze returns data to identify patterns and trends, enabling companies to take action to prevent future returns.

3. Improve customer experience: The use of AI-based chatbots and virtual assistants improves the customer experience by providing faster and more personalized service, which can reduce returns due to customer dissatisfaction.

4. Improve the accuracy of the product descriptionAI can help improve product description, which can reduce returns due to the customer receiving a different product than expected.

5. Improve the return processAI helps by predicting, automating and improving the return process, which can result in a reduction of return costs, making the so-called reverse logistics more efficient.

A very illustrative example is the following: AI can detect patterns of behavior of each user, so it can detect that a person usually buys shirts of two different sizes, S and M, depending on the brands and the season is more likely to return the size S, so that by offering the available stock, it automatically indicates that there is no stock of size S, if the predicted probability of return is very high, thus avoiding a possible return, minimizing the possibility of losing the sale and above all, eliminating the costs associated with a return.

In short, the AI takes into consideration all available data when offering or not offering certain sizes: behavior of each user, and users with similar behavior, brand and sizes of the garment, season or period of the year, costs and margin of the garment and shipping logistics, probability of generating a return and the costs associated with this return.

Which industries can most benefit from implementing Artificial Intelligence to reduce product returns?

The artificial intelligence can help reduce product returns in several industries, some of the most benefited are:

• E-commerceThe company's product recommendation and product description accuracy is improved, helping the user to better locate and understand the products they are purchasing, thus reducing the return rate. 

• RetailThe system can analyze returns and identify patterns and trends so that companies can take preventative measures. It can also help improve the customer experience by generating a faster and more personalized service.

• Manufacturing, detecting defects in the manufacturing process of the products, helping to improve quality, reduce defects and imperfections, as well as improving manufacturing times and therefore shipping and delivery times to the customer.

• Customer Services. Thanks to Artificial Intelligence, the return process can be improved, making it more efficient, faster and more intuitive for the user, so that it becomes more efficient, with less costs for the company and improves the consumer experience, being able to build loyalty and make them buy more regularly.

In general, where the greatest benefits can be seen is in industries where the volume of transactions and data is high and in which the process of return is recurring.

AI solutions applied to the Retail sector

Our AI solutions applied in the Retail sector will help you improve customer experience, automate business processes and increase efficiency in decision making.

More information

Success stories in reducing returns with Artificial Intelligence solutions

There are several success stories where AI solutions have helped reduce returns. One example is e-commerce company Zalando, which uses artificial intelligence to improve accuracy in product recommendations and reduce returns. Zalando uses a recommendation system based on AI that analyzes transaction and behavioral data to recommend relevant and customized products to each customer. The system has enabled the company to improve recommendation accuracy by 20% and reduce returns by 15%.

Another example is the clothing company Stitch Fix, that uses artificial intelligence to customize product recommendations and reduce returns. The company uses an AI-based recommendation system that analyzes customer style, size and preference data to recommend relevant, personalized products. The system has enabled the company to improve recommendation accuracy by 30% and reduce returns by 25%.

Of course, we cannot leave without mentioning the case of Amazon: Amazon uses AI in several areas of its business to improve accuracy in product recommendations, analyze returns data for identify patterns and trends, improve the customer experience and automate and improve the returns process.

What does it take to be able to apply Artificial Intelligence to my company and reduce product returns?

In order to apply artificial intelligence to your business and reduce product returns, several key factors are needed:

• DataIt is essential to have access to a large amount of transaction, returns, and customer data to train and test AI models.

• Technological infrastructureAdequate technology infrastructure, including hardware and software, is required to host and run the AI models.

• Trained personnel: A team of professionals with expertise in data science, machine learning and artificial intelligence is needed to develop and maintain AI models.

• Business processIt is crucial to have a solid business process and a clear strategy to implement AI in your company and reduce product returns.

• An implementation platformAI implementation platform: It is important to have an easy-to-use and scalable AI implementation platform to implement AI models and automate business processes.

• Communication and commitmentIt is key to establish clear communication and strong engagement with all stakeholders, including employees, customers and suppliers, to ensure a successful implementation of AI in your company.

• Regular evaluationsRegular evaluations of AI models are needed to ensure that they are providing accurate and relevant results and to make adjustments if necessary.

With these key factors in mind, your company will be in a much better position to successfully implement artificial intelligence and reduce product returns.
In summary, the AI can help reduce product returns through data analysis and automated decision making to improve product recommendation accuracy, enhance customer experience, improve product description accuracy, and improve the returns process.