AI Virtual Try-On Startups Are Transforming Fashion Retail and Cutting Returns by 40%

A new wave of AI-powered virtual try-on startups is transforming online fashion retail, according to a CNBC report published on April 5, 2026. Companies like Catches and Genlook are using generative AI to let consumers visualize clothing on their own bodies before purchasing, tackling one of e-commerce's most expensive problems: returns.

A Multi-Billion Dollar Problem

Online clothing returns are a financial black hole for retailers. Between 20 and 30 percent of returns are caused by sizing issues, color discrepancies, or the simple inability to visualize how a garment will look when worn. This phenomenon, known as "bracket buying" — ordering multiple sizes with the intent to return all but one — eats directly into company margins.

How the Technology Works

Unlike older solutions requiring complex 3D modeling, the new generation of virtual try-on relies on generative AI applied to 2D imagery. The process is straightforward:

The consumer uploads a selfie or photo
The algorithm analyzes body shape and proportions
The AI generates a realistic image of the person wearing the selected garment

Catches has developed a platform that creates a "digital twin" with what it describes as "mirror-like realism." Its application went live last month on luxury brand Amiri's website for a select range of clothing.

Genlook has integrated its app directly into the Shopify ecosystem, allowing merchants to add a virtual try-on widget in minutes without writing a single line of code.

Measurable Results

The numbers speak for themselves:

Shoppers using virtual try-on convert at 2.3 times the rate of those who do not
Add-to-cart rates increase by 35% among widget users
Returns drop by an average of 38%
A European luxury brand saw its conversion rate rise from 2.8% to 3.6%, alongside a 28% reduction in returns

Catches projects that its app can drive a 10% increase in conversions and a 20 to 30 times return on investment for brand partners.

Tech Giants Are Watching

Major technology companies are not sitting on the sidelines. Amazon, Adobe, and Google have all developed their own virtual try-on solutions in various forms, partnering with major brands to roll out the technology. Shopify has officially integrated Genlook's solution into its platform, stating that it "removes sizing doubts, boosts buyer confidence and drives higher conversion rates while reducing costly returns."

An Exploding Market

The global virtual try-on market, valued at $9.17 billion in 2023, is projected to reach $46.42 billion by 2030, growing at a compound annual growth rate of 26.4%. The broader AI-in-fashion market is growing even faster, with a CAGR exceeding 40%.

A Strategic Advantage Beyond Conversion

Beyond reducing returns, virtual try-on offers a strategic advantage in zero-party data collection: brands can build engaged CRM lists while gathering real-time inventory and merchandising insights, without relying on third-party cookies.

As customer acquisition costs continue to rise, brands adopting this technology are positioning themselves to solve three fundamental problems in online retail: fit, trust, and sustainability.

Source: CNBC