Online retailers size up shoppers to reduce returns

Online retailers are trying to cajole consumers into revealing their vital statistics with new sizing technology tailored to turn back a tide of returned garments that is hurting profits.

Up to half of the clothes bought online are sent back, many due to poor fit, squeezing retailers’ margins and creating logistical problems in recovering and re-selling rejected stock.

Mintel research shows 45% of Brits and 41% of German consumers bought clothes online in the last year.

Germany’s Zalando and Britain’s ASOS, online-only fashion retailers, grabbed market share by promising a free returns service — that now threatens to undermine long-term profits.

ASOS chief executive Nick Robertson said a 1% fall in returns would add £10m (€11.9m) to the company’s bottom line. ASOS reported attributable net income of £32.9m for the year to Aug 31, 2012.

It’s not a problem that can simply be solved by charging for returns, retailers say. Businesses would still find it tough to recoup the cost of extra shipping and warehouse fees, damaged goods, and difficulty in selling items that may no longer be season-specific — not to mention the intangible impact of unhappy customers.

The average ASOS returns rate is about 30%.

E-commerce still only accounts for 15% of total garment sales. Much of the lag is down to shoppers’ reluctance to buy clothes they can’t try on. Fits.me, a London-based developer of sizing software, estimates that around 80% of all clothes bought in-store pass through a fitting room.

Fits.me is one of several start-ups to have recently sprung up in response to the industry problem, producing software they claim will reduce returns and boost sales by helping shoppers select the correct tailoring.

Fits.me, whose technology, allows customers to visualise clothes on different body shapes, polled German online shoppers and found 35% of them aborted potential purchases because of concerns about fit.

“There is no size standardisation. The risk of buying online is very high,” said founder Heikki Haldre.

Retailers are reluctant to go into too much detail about how they are trying to reduce returns. But the experience of several start- ups suggests consumers are put off by requests for too many measurements.

German mail-order giant Otto is working on new sizing software with several technology developers who have had to rework prototypes that asked shoppers for precise statistics.

“When people buy clothes online they want to do everything fast and quick. Most people don’t want to do any work,” said Asaf Moses, co-founder of Berlin-based UPCload, which had to abandon an approach using web-cams to take body measurements. Only 15% of shoppers opted to use it.

UPCload came up instead with a “best guess” system in which shoppers enter their gender, weight, height, and age, then choose the best match from three body shapes. “Once we took this approach, sales just boomed,” Moses said.

German consumers are quick to return goods owing to the country’s long- established mail order industry, with its free returns. Trousers and shoes are the most regularly returned items. So Otto is working with Mifitto, a Duisberg-based firm, to find new ways of sizing.

The company has an app for Otto.com which asks shoppers to upload a tracing of the outline of their foot, but says it sees the future in scanning the 3-D interior of shoe brands to recommend the right size and style to shoppers.

Otto has shifted its mail-order business online to become Europe’s biggest player in e-commerce after Amazon.