DEBORAH WEINSWIG Executive Director – Head of Global Retail & Technology Fung Business Intelligence Centre [email protected]New York: 646.839.7017 July 28, 2015 Fit for Purpose? Online Fitting Tech and the Boom in Internet Apparel • The uncertainty of finding a good fit when shopping for apparel online can drive up the rate of returns, and so pile extra costs onto retailers. • Online return rates for apparel can range between 15%–20% at multichannel retailers and 35%–40% at multibrand pure plays • Fittingtech services True Fit and Fits.me can push returns rates down by double digits. • Other gains for retailers including improved conversion rates, with True Fit saying it pushes up conversion by 300%. • And Fits.me emphasizes the insight it can offer to retailers on their customers’ demographics, body perceptions and fit preferences.
Transcript
D E B O R A H W E I N S W I G E x e c u t i v e D i r e c t o r – H e a d o f G l o b a l R e t a i l & T e c h n o l o g y F u n g B u s i n e s s I n t e l l i g e n c e C e n t r e d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m N e w Y o r k : 6 4 6 . 8 3 9 . 7 0 1 7
July 28, 2015
Fit for Purpose? Online Fitting Tech and the Boom in Internet Apparel
• The uncertainty of finding a good fit when shopping for apparel online can drive up the rate of returns, and so pile extra costs onto retailers.
• Online return rates for apparel can range between 15%–20% at multichannel retailers and 35%–40% at multi-‐brand pure plays
• Fitting-‐tech services True Fit and Fits.me can push returns rates down by double digits.
• Other gains for retailers including improved conversion rates, with True Fit saying it pushes up conversion by 300%.
• And Fits.me emphasizes the insight it can offer to retailers on their customers’ demographics, body perceptions and fit preferences.
2 Fung Business Intelligence Centre (FBIC) publication: Fit for Purpose? Online Fitting Tech
Fit for Purpose? Online Fitting Tech and the Boom in Internet Apparel Online shopping for fashion is popular, and it’s getting more popular all the time. In markets such as the US, the UK and Germany, 17% or more of clothing and footwear sales will be made online this year, as we outline in our new report, Global Online Fashion. Yet for shoppers buying apparel online, a perennial hurdle is the issue of fit: Will the product they choose fit them properly?
Product returns are a natural result of uncertainty over fit, and this can heaps added costs onto those businesses selling online. For multichannel fashion retailers, 15%–20% of online purchases are typically returned, but for pure plays, the proportion can be higher. Return rates also vary by brand offering, with retailers selling multiple brands typically seeing returns of 35%–40%, but monobrand retailers (such as Tommy Hilfiger) seeing an average return rate of only 15%–25%, due to greater consistency in sizing and consumer familiarity with the product.
Shopper caution when choosing goods online also depresses conversion rates, i.e., the proportion of website visitors who go on to buy a product. On average, e-‐commerce conversion rates are typically around 2%, meaning fully 98% of browsers don’t go on to buy at the time they visit.
To help overcome these barriers, more and more retailers are adopting third-‐party online fitting services. In this article, we look at two major service providers, Fits.me and True Fit, and we talk to Jim Rudall, Vice President, Commercial & Enterprise, at Fits.me, and Jessica Murphy, Cofounder of True Fit.
DRIVING DOWN RETURN RATES
The Issue of Returns Driving down the number of purchases returned by shoppers is the headline story for both Fits.me and True Fit. But there is no simple answer to the question of the “average” return rate for apparel sold online.
As we’ve already noted, return rates can range between 15%–20% at multichannel retailers and 35%–40% at multi-‐brand pure plays.
But return rates vary by product, too. The rates are highest in dresses and shoes, where a close fit is essential, Murphy tells us, and lower in knitted tops, where sizing is more generous. Returns also tend to be more of a problem for retailers selling across borders. They’re a “huge problem” for international retailers, says Rudall, as retailers see different body shapes and different demographics from country to country—which means there’s a big challenge in getting customers to find their right fit. And, of course, with cross-‐border retailing, shipping and return charges are substantially higher, piling extra costs onto retailers.
The Improvements Our interviewees emphasized the contribution their companies can make to driving down these rates, and both claim a similar success rate. Murphy notes that True Fit can reduce return rates by 10%–50%, while Rudall says Fits.me pushes down return rates by “single-‐digit or double-‐digit percentages, where we work in partnership with retailers who examine the whole customer experience.”
And how many online shoppers are using these services? Some 10%–30% of consumers shopping on True Fit–enabled sites use the fitting service, while at Fits.me, the usage ratio varies from single-‐digit percentages to 30%. Rudall notes that Fits.me usage varies according to the type of shopper, not the type of retailer. New users on a website tend to use the service a lot in order to understand the retailer and how its fit differs from the brands they’re already familiar with, while loyal shoppers use the service to “immerse themselves in the experience.”
3 Fung Business Intelligence Centre (FBIC) publication: Fit for Purpose? Online Fitting Tech
“A simple size recommendation tool is not enough,” says Rudall. “Retailers must start doing better with consistency of manufacturing and the availability of product data across the business.”
WHAT ELSE ARE RETAILERS GAINING FROM THESE SERVICES?
Improved return rates are not the only positive outcome of these services.
Conversion Rates True Fit’s Murphy tells us that improved conversion rates are a big win for her clients, with retailers typically seeing an increase in conversions of 300% when they adopt the service. On average, just 2% of website visits convert into a purchase, but True Fit takes this average conversion rate up to 8%. “Conversion is the biggest challenge for online retailers because 98% don’t buy on a site,” says Murphy. And the number one reason for low conversion rates in fashion? Uncertainty over fit.
Data and Insight Retailers also gain from the data collected by these companies. Fits.me helps stores build a picture of their customers in terms of measurements, demographics, body perceptions and fit preferences. These data can be made available to retailers across their operations, and they have “heavily influenced the buying and design processes of a number of retailers,” says Rudall. For instance, retailers can make “more efficient and profitable purchasing decisions” on a product level based on data on the dimensions and preferences of their customers.
True Fit offers its clients similar insight. The company can show stores “who their customer is,” says Murphy, and help them refine their product assortment. True Fit is adding 200,000 new users per week—equating to masses of data that retailers can tap into.
Happy Shoppers Lastly, improved customer satisfaction can be a big win for retailers. Murphy emphasizes that solving shoppers’ problems was the reason for setting up True Fit—the company was founded “to solve a consumer issue”—so she is “really pleased” that it’s now making shopping easier for millions of consumers.
And Rudall notes that the cost of returns is not simply one that’s
measured by retailers: from a customer satisfaction perspective, too, getting it right first time is important. And he notes that his company can offer potential improvements to repeat-‐purchase rates as a result of engaging the customer. “Most retailers are finding the most important factor is repeat purchase—building loyal customers.”
4 Fung Business Intelligence Centre (FBIC) publication: Fit for Purpose? Online Fitting Tech
London-‐based Fits.me has historically offered a “virtual fitting room” service, and the company now says it’s transforming as a business by using the solutions it pioneered to “improve every aspect of apparel shopping” for both consumer and retailer. “We’re putting the notion of personal fit preferences at the heart of improving the shopping experience and producing a flow of shopper data which can be used to drive decision making across a retail business,” says Rudall.
Fits.me’s founding service created images of all possible sizes and fits of a product using shape-‐shifting robot mannequins that can expand and contract “to represent the majority of physical dimensions and body shapes.” The resulting images appear on virtual fitting room links on retailer websites, where a shopper can see how garments look and fit on his or her own body size and shape.
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True Fit, based in Woburn, Massachusetts, eschews the hardware of mannequins and photography in favor of leveraging data that already exists on product sizes as well as shoppers’ existing retailer preferences. The company’s website says, “True Fit knows what fits because it partners directly with over 2,000 of the world’s best brands and leading retailers, managing the largest database of footwear, apparel, and consumer fit data in the world.”
True Fit works with apparel manufacturers to get detailed points of measure for garments. Shoppers enter their height, weight, age and body shape, and select their favorite brand for a similar garment. True Fit crunches the numbers to offer a fit rating on a 1–5 scale for selected garments on retailers’ sites; for garments where a rating is not available, True Fit will suggest the most appropriate size from those that are available.
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True Fit is growing its client base fast. It currently works with 35 retailers and expects to double this number by the end of 2015. True Fit’s clients are mostly multichannel retailers, in part because these types of retailers are interested in knowing their shoppers wherever they buy, says Murphy. But the company is now working “more and more” with monobrand retailers, bringing names such as Phase Eight, Uniqlo, ALDO and Kate Spade New York on board. In the US, True Fit’s clients include Nordstrom and Macy’s, while department store chain House of Fraser has been the company’s most high-‐profile signing in the UK.
Fits.me has also focused on multichannel clients. Big, tier-‐one multichannel retailers “run their businesses on data, and the insight we provide is invaluable in making decisions across their business,” says Rudall. While fast-‐growing pure plays tend to focus on the wins in top-‐line conversion and reducing returns, larger, more established multichannel players tend to focus harder on the insight, engagement and loyalty they gain from the service.
Fits.me’s clients currently include Hugo Boss and QVC, and UK formalwear chains Thomas Pink and T.M.Lewin.
WHAT’S AHEAD?
Finally, what’s in the pipeline for these two firms?
At True Fit, the focus this year is on rolling out the service to more retailers, and emphasizing its suitability for all apparel products. The company also wants to get more shoppers on board: as we already noted, it expects to double its client base by the end of 2015. And its current data set of nearly 8 million consumers will balloon to around 16 million by the end of the year, Murphy forecasts. This boom in users “has delighted us,” says Murphy. “The tech was really for them.”
Meanwhile, Fits.me says it’s working with tier-‐one retailers to “put shopper dimensions and fit preferences at the heart of the shopping experience and help retailers to personalize the customer journey.”
Both Rudall and Murphy emphasize that their companies benefit retailers beyond simply driving down costly return rates—they also improve the customer experience. We think services such as these can help retailers take Internet shopping beyond the functional transaction that it has so often been, allowing the channel to compete more fully with the immersive experience of physical stores.
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