In case you were wondering, no, “AI” is not going to solve the retail “returns” problem.
It can make your returns problem better, but come on. Most “AI” you see in my industry is Snake Oil, a rebranding of an old problem and an old solution, allowing the salesperson to charge a premium.
Why do I say this?
In 1993 (yeah … 1993) I built a model using the hyperbolic tangent function (look it up) to predict the return rate of every one of four million twelve-month buyers. Today the snake oil folks would call the hyperbolic tangent function “AI”. Anyway, we learned that returns behavior was not predictable until a third purchase. At that point, any customer who returned 60%ish of items (i.e. bought 9 items, returned 6 on those first three purchases) was a customer likely to return in the future, costing us $$$$. Our decision? Cut back on mailings to those customers … from 20-25 per year to 4-6 per year. Boom. Another million dollars of profit.
In the modern world, some of you have Action Streams for customers who return too much merchandise. There is no reason you have to email customers who return 60%+ of what they purchase. You create an Action Stream once the customer passes a threshold, and you send the customer maybe 4 email campaigns a month instead of 4 per day.
You are under no obligation to keep emailing customers who return most of your merchandise. The customer can still buy from you. But you don’t have to waste resources, do you?
Set up an Action Stream to bypass customers who return too much merchandise. You’ll also bypass all the snake oil salespeople pushing “AI” solutions upon you.
