IBM Watson could be the cure for costly returns headaches in retail

James Pepper, technical services director at Vista Retail Support, offers his opinion on how cognitive computing can solve retail’s problems with costly returns.

For traditional retailers, there are few things more headache-inducing than processing returns from items purchased online. Despite online staff taking credit for making the sale, it’s the staff in the physical stores who must pay with their time when a customer comes in to return an item they do not want.

Looking at the frequency of returns, it’s no wonder why brick-and-mortar staff are being left with headaches. A recent study estimates that as many as 33 per cent of all transactions made online eventually end up being returned. This problem is especially prevalent for online fashion and clothing retailers, and is most commonly attributed to consumers ordering items in order to try out different sizes.

However, research shows this assumption to be untrue, as returns are more frequently a consequence of consumers trying out different styles, returning the items they feel don’t fit their personal style.

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.

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.

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 will give consumers a greater power of personalisation in areas where purchasing is heavily influenced by taste. 

The sophistication of these solutions will also bring 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.

About the author

James Pepper is technical services director at Vista Retail Support.

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