Online Fashion Returns Reach 40%: Can Virtual Try-On Solve the Fit Problem?

By Ladeesh PC, Director and Co-Founder of Estilocus

Fit-related returns continue to challenge online fashion brands, raising questions about whether virtual try-on technology can reduce sizing uncertainty and improve customer retention.

Online fashion returns remain a significant operational challenge for brands, particularly when garments fail to meet customers’ fit expectations. According to Base.com’s COD Return Rates by Product Category in India 2026 report, fashion and apparel orders paid for on delivery have return rates of 25% to 40%. Virtual try-on and AI-powered sizing tools are emerging as potential ways to address uncertainty, but technology alone cannot resolve every fit-related issue.

The Hidden Cost of Fashion Returns

A returned garment involves more than a reversed sale. Reverse shipping, inspection, repackaging and handling increase costs, putting additional pressure on already narrow margins. Products may also lose value if they cannot be resold at their original price.

Fit is a major contributor to fashion returns. McKinsey’s State of Fashion research has estimated that roughly 70% of fashion returns are linked to garments not fitting properly. Differences in sizing between brands make online purchases more difficult, while “bracketing”—ordering multiple sizes of the same item and keeping only one—adds to shipping and return expenses.

Menswear presents particular challenges. A shirt with shoulders that do not fit correctly or trousers that sit poorly at the waist may be rejected by the customer, even when the rest of the garment meets expectations.

Return Pressures on D2C Fashion Brands

As competition intensifies, operational efficiency is becoming as important as marketing for direct-to-consumer (D2C) brands. Unicommerce’s India D2C report, published in April 2026, highlights several pressures affecting the sector:

• More than 11,000 D2C brands share approximately 10–15% of India’s e-commerce market.
• Growth of about 33% in FY26 was driven by order volumes rather than price increases.
• Return-to-origin (RTO) rates peaked at 39% in November 2025, while leading brands reduced them to 21% by March 2026.
• Cash-on-delivery (COD) returns peaked at 58% during the festive season, compared with less than 15% for prepaid orders.
• Tier 2 and Tier 3 cities accounted for nearly 66% of incremental order volumes, with greater sensitivity to returns.
• Fashion, largely a one-time-purchase category, faces additional pressure to retain customers.

RTO refers to parcels that are returned because delivery is unsuccessful, rather than garments returned specifically because of fit issues. However, both situations can increase logistics costs and reduce margins.

How Technology Could Influence the First Purchase

The Business of Fashion–McKinsey State of Fashion 2026 report identifies AI as increasingly important to fashion businesses. More than 35% of executives were already using generative AI in areas such as customer service, imagery and product discovery. More than half also identified customer retention as a key priority for the year.

For online fashion brands, an unsatisfactory first purchase can have consequences beyond the cost of processing a return. A poor fit may discourage customers from purchasing again, making acquisition spending less effective.

Brands are responding with AI-powered size recommendations, digital avatars, virtual try-on tools and exchange-first policies. These approaches aim to reduce uncertainty before checkout and make the purchasing experience more reliable.

What Virtual Try-On Can—and Cannot—Do

Virtual try-on can help shoppers assess how a garment might look before purchasing it. By offering a visual representation of style, proportion and colour, these tools may help customers make more informed decisions and reduce some of the guesswork that leads to bracketing.

However, visualisation is not the same as a reliable assessment of physical fit.

Virtual try-on cannot replace accurate garment measurements, consistent size charts, dependable product information or an understanding of how a fabric behaves when worn. Differences in construction, material properties and sizing standards can still affect the final fit.

For this reason, virtual try-on is best treated as one part of a broader fit strategy. Its effectiveness depends on the quality of the product data and sizing information supporting the experience.

A Broader Approach to Reducing Returns

Fashion brands are exploring several ways to reduce the cost and frequency of returns, including clearer size guidance, exchange-first policies, fraud detection and more efficient logistics.

Virtual try-on can contribute to these efforts by helping customers make decisions with greater confidence. However, it works best alongside accurate sizing, consistent product construction and transparent product descriptions.

Returns are unlikely to disappear entirely. For online fashion brands, the more useful approach is to examine return patterns as evidence of where the customer experience may be falling short. Addressing those issues can help reduce avoidable costs while supporting customer satisfaction and retention.

Ultimately, virtual try-on can help narrow the gap between online product presentation and customer expectations, but solving the fit problem requires both better technology and better product fundamentals.