Halloween returns: How Augmented Reality Can Cut Down on Product Returns

With Halloween just around the corner, here’s something scary: Americans are expected to spend close to $3 billion this year on costumes, according to the National Retail Federation, many of which only get worn once. Factor in the growing number of returns spawned by the rise of e-commerce, and the environmental impact of Oct. 31 can be frightening all on its own.

A bit of technology could help. For the first time this year, costume company Disguise Inc. is partnering with Snapchat owner Snap Inc. on an augmented-reality lens that lets users try on costumes virtually and then order them directly from their phone. Snapchat users take a full-body photo and then browse Disguise’s Snapchat store for costumes, which they can “try on” using an AR filter that shows how the costume would look on their person before they buy it.Snapchat’s AR lenses have a history of going viral — the company only started baking in e-commerce this year — but the technology is also increasingly considered a way to reduce purchase returns and the greenhouse-gas emissions that come with them. As e-commerce becomes more common, especially for clothing, “returning is a huge problem,” says Andrew Lipsman, an analyst specializing in retail at consultancy Insider Intelligence.Last year, American shoppers returned $761 billion worth of goods, or nearly 17% of all retail sales, according to NRF. In e-commerce, where consumers don’t generally have the option of trying before they buy, return rates can exceed 20%.

The transportation and logistics industry is already the biggest contributor to carbon dioxide emissions in the US, accounting for 27% of total emissions in 2020. Fashion, too, has a big footprint, accounting for up to 10% of global carbon dioxide output — more than international flights and shipping combined. The more parcels sent back to merchants, the greater those emissions.

Snap may have helped normalize AR, but it’s far from alone in applying the technology to shopping. Canadian retailer Shopify also lets shoppers try things on virtually, and companies that include Amazon. com Inc., IKEA Group, and Walmart Inc. are all experimenting with letting customers use AR shopping tools to, for example, see how an armchair might look in their living room before buying it.

Beyond making e-commerce more convenient, the efforts appear to have potential. Roughly two-thirds of consumers who used AR technology to guide their shopping decision were less likely to return their purchase, according to a recent survey conducted by market research firm Alter Agents, which polled more than 4,000 shoppers in the US, the UK, France and Saudi Arabia. The survey didn’t specify which products participants bought, but industry experts say virtual try-ons work best for cosmetics at the moment, while apparel and furniture are still tricky.

Lipsman is among those skeptical about the technology’s readiness, particularly after he failed to find a suitable couch using AR. But embracing augmented reality is “directionally right” in the search for solutions that could reduce carbon emissions caused by frequent returns, he says: “In the long term, it could be significant if it becomes useful to consumers and if it becomes a normal and routine part of how they shop.”