How retailers can cure returns headaches with IBM Watson

Despite the many challenges of operating a retail store, those involved in the business know there are very few problems responsible for more headaches than processing returns for items that customers have purchased online. While their counterparts in the online side of the business get all the credit for making the sale, it’s the staff in the brick-and-mortar shops who have to pay the price of time and space when a customer shows up to return their unwanted item.

A cursory glance at the sheer prevalence of returns makes it clear why physical retailers are coming down with so many headaches. According to a recent study, the amount of transactions made online that are eventually returned is as high as 33 per cent. For retailers in fashion and clothing, this problem is especially common. And while many would assume that these returns are a result of customers ordering items to try out different sizes, research shows it is actually a consequence of customers trying out different styles.

This all seems like a very clumsy system in the era of smartphone commerce, one which piles costs on to retailers unnecessarily. Although some consumers may enjoy trying out different styles, sending unwanted items back is still quite a hassle for them.

Reducing the problem of returns

With all this in mind, isn’t it time the retail industry adopted solutions based on cognitive computing capabilities such as IBM Watson? This is not a fictional super-brain, it is a learning system that can analyse huge amounts of data from different sources in order to reveal useful insights. On a day-to-day level, cognitive systems and their innovative user interfaces can assist in reducing the problems of returns by enabling vastly improved and automated marketing tools.

These systems very quickly learn to understand individuals, so that when the consumer logs into a retailer’s online shopping portal they can receive recommendations based very precisely on their personal buying history, along with their brand and style preferences.

The result is that the customer is impressed by the retailer’s understanding of what they normally buy and are searching for. They don’t need to keep lists and notes reminding themselves of what worked last time, or which brand or style of shirt they prefer.

Cognitive systems such as Watson can even pick up on the slight differences in size between manufacturers, or make recommendations about colour combinations, based on what the customer has ordered and enjoyed or used previously.

These systems combine this information with what they know about the shopper through their social media patterns, their physical location and even the local weather forecast in order to predict what an individual should consider buying.

Crucially, a system based on Watson gives customers a greater range of more accurate options that relate to personal taste, not just in clothing but also in food, drink, décor and many other items.

Cognitive computing

In the near-future we are likely to see this develop with the roll-out of cognitive-based solutions similar to VineSleuth, a system whereby the shopper can be more informed at the point of choosing a bottle of wine based on what the systems have learnt about the shopper and their tastes. These solutions will give consumers a greater power of personalisation in areas where purchasing is heavily influenced by taste. The sophistication of these solutions will also give consumers the confidence they need to step outside their normal shopping patterns, perhaps by using sliding-scales or new levels of visualisation to indicate levels of adventure in relation to styles of clothing, cars, décor, furniture, or food. Instead of worrying about risking their cash on an item from an unknown brand or manufacturer, consumers will have built up trust in the solution, encouraging them to make purchases they may otherwise pass up on.

There is no question that cognitive computing will be highly beneficial for both online retailers and their physical counterparts, and ought to be a top priority on any company’s agenda. Through the power of personalisation, it will substantially reduce the likelihood of costly returns while giving the retailer a strong indication of emerging trends, allowing for far more efficient replenishment and fulfilment. Thanks to this powerful technology, retailers finally have a cure for their greatest headaches.

James Pepper, technical services director, Vista Retail Support

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