- ECGI Holdings is a diversified holding company with a unique portfolio in viticulture, hospitality, and luxury fashion
- The company’s subsidiary Pacific Saddlery is looking to introduce technologies that leverage AI capabilities to provide customer fit recommendations amid plans to launch a new line of ready-to-wear apparel under its Allon brand
- The company believes AI-powered solutions will help increase conversion rates, reduce return rates, and enhance customer engagement and loyalties
- Apparel manufacturers and online apparel brands are turning to AI-driven technologies to reduce returns and their impact on the bottom line
- A 2023 study listed size/fit, color, and damage as the top three reasons for online apparel returns
In a 2023 study, Coresight Research surveyed decision makers at U.S.-based apparel brands and retailers, revealing that the average return rate of online apparel orders in the U.S. stood at an estimated 24.4%. This return rate translated to $38 billion in returns – based on the research firm’s estimate of the value of the online apparel and footwear market in 2023, which stood at $155.8 billion (https://ibn.fm/DOjHE).
The returns come at a cost to the apparel companies and retailers, especially considering a majority of them offer free shipping on returns. The shipping cost, coupled with the processing and restocking costs, can significantly impact the companies’ bottom line, leading to an estimated $25.1 billion hit, according to the study. Against this backdrop, apparel companies and retailers hold that reducing the return rate to zero “could improve the bottom line of their online apparel business by at least 20%.”
To reduce the return rate, companies must first understand the reasons customers return the purchased goods, which the Coresight Research study provided. Based on responses from the surveyed brands, the study found that size/fit (53%), color (16%), and damage (10%) are the top three reasons for online apparel returns. Guided by this understanding, the study notes that “Apparel brands and retailers are adopting different approaches, including changing return policies and leveraging virtual try-on technology, to reduce returns.”
For its part, Pacific Saddlery, a subsidiary of diversified holding company ECGI Holdings (OTC: ECGI), plans to introduce technologies that leverage artificial intelligence (“AI”) capabilities to provide personalized fit recommendations. The company, which manufactures and sells equestrian apparel, tack, equipment, and accessories, believes the AI-powered solutions will result in increased conversion rates, reduced return rates, and enhanced customer engagement and loyalties.
The AI-powered solutions can take many forms, from AI-powered precise body measurement apps and AI-powered virtual styling tools to AI-driven augmented and virtual reality solutions that let customers virtually try on clothes. In addition, e-commerce giant Amazon.com Inc. (NASDAQ: AMZN) recently introduced a feature that uses AI to extract details like size, fabric, style, and fit from customer reviews and then summarize the details in an easy-to-use format that provides relevant information to customers (https://ibn.fm/blAGC).
The AI-driven body measurement apps let apparel companies and online retailers collect individualized digital body measurements for each customer. Armed with this data, the companies can deliver tailored size recommendations for each customer’s body type as well as predict full-body measurements from just a few easy-to-measure dimensions. This enables the companies to display only the best fitting clothes on their online stores.
In addition, the data helps apparel manufacturers to optimize future designs according to body shapes and sizes. This capability enables the companies to cut garments to sizes that actually fit people. According to an article in 3DLook, the result is that “Customers receive products tailored to their bodies, while businesses enjoy fewer returns and less product waste” (https://ibn.fm/ADDQ3).
With Pacific Saddlery’s plans to launch a new collection of ready-to-wear equestrian apparel under its Allon brand now in high gear and given the advantages of AI-powered solutions during retail and manufacturing, it is a no-brainer to incorporate AI into its operations. The company initially intends to use AI measurement on the retail end to recommend apparel that best fits customers. This intervention, the company believes, will help give customers more confidence in the sizes and fits they select and reduce returns. Later, the company plans to use AI in manufacturing, enabling it to capture precise measurements for made-to-measure apparel.
To support its plans to incorporate AI and machine learning into its operations, ECGI recently announced the addition of AI and machine learning (“ML”) expert Mandeep Singh to its Board of Advisors (https://ibn.fm/5xWff). With a distinguished career in AI, ML, and data science, Singh brings a wealth of expertise that promises to drive growth and innovation at ECGI and Pacific Saddlery. And as Jamie Steigerwald, CEO of ECGI Holdings, noted, Mandeep’s cutting-edge expertise in AI and ML positions the company to “achieve extraordinary advancements.”
For more information, visit the company’s website at www.ECGIHoldings.com.
NOTE TO INVESTORS: The latest news and updates relating to ECGI are available in the company’s newsroom at https://ibn.fm/ECGI
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