Reducing returns with AI: What retailers need to know

As the holiday shopping season approaches, retailers are preparing for the influx of returns that come with it. With Americans returning $260 billion worth of goods last year, it's important for retailers to find ways to reduce the number of returns and keep their profits high. One way to do that is by using artificial intelligence (AI) to better understand customer behavior. Interested in reducing returns? Read more to learn everything you need to know about using AI for returns reduction.


In e-commerce, returns are a necessary evil. They cost businesses time and money, and can be frustrating for customers. But why are returns so important to reduce? Here are a few reasons:


  1. Returns can eat into profits. Whenever a customer returns an item, the business has to process the return and give the customer a refund. This eats into the business's profits, and can even put them in the red if returns are high enough.
  2. Returns can damage items. If an item is returned too many times, it can become damaged and may even have to be discarded. This means that businesses have to replace returned items, which again costs them money.
  3. Returns can discourage customers from shopping with a business again. If a customer has a bad experience with returning an item, they may be less likely to shop with that business again in the future. This could lead to lost sales and revenue for the business.
  4. Returns can impact a business's reputation. Since customers often share their experiences with others, word can spread about a business's policy on returns. If customers feel that a business is too strict or unfair when it comes to returns, this could negatively impact the business's reputation.


Clearly, there are many good reasons to try to reduce the number of returns a business has to deal with. By taking some simple steps to streamline the return process and make it more customer-friendly, businesses can encourage shoppers to keep shopping with them, while also saving time and money on processing returns.


The increase in new technologies and artificial intelligence offers a solution to reduce returns. AI can help to identify trends in return behavior, which can then be used to adjust policies and procedures accordingly. For example, if AI detects that a certain type of product is being returned more frequently than others, e-commerce retailers can take steps to improve the quality of that product or offer discounts on it to encourage customers to keep it. 


If you’re an e-commerce business, the cost of returns is likely one of your biggest expenses. Not only do you lose the value of the returned product, but you also have to spend time and money processing the return and restocking the item. Luckily, there are ways to reduce returns using AI. In this blog, we’ve shown how machine learning can be used to identify factors that lead to returns and then predict which items are most likely to be returned. Want to learn more? Book a demo with our team today- help@smater.ai 





21 September 2022


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