Online apparel returns have become a major financial burden for retailers, with 15.8% of total retail sales and 19.3% of online purchases returned in 2025, largely driven by uncertainty around fit and consumer expectations for free returns. These returns often cost more to process than the product value itself, directly impacting margins and profitability. In response, generative AI-powered virtual try-on technology is rapidly emerging as a scalable solution, allowing consumers to visualize fit and styling more accurately before purchasing. Retailers and platforms are integrating these tools across product pages, search, and checkout to reduce returns and increase conversions, with early implementations suggesting improved performance metrics such as lower return rates and higher purchase confidence. Advances in AI now enable realistic simulations of fabric movement, body shape, and layering, addressing limitations of earlier virtual try-on models. As adoption expands across major platforms and brands, the technology is being positioned as a key lever to reduce bracketing behavior and improve operational efficiency, even as refinement continues. Advertisers can capitalize on this trend by highlighting fit accuracy and digital try-on experiences to drive purchase confidence and reduce friction across apparel, e-commerce, and retail technology.
***Opportunity:
Apparel Retailers, Online Fashion Marketplaces, Fashion Boutiques, Department Stores
