What is Return to Origin (RTO) and its Impact on your Business?

Did you know 30% of online orders fall in the RTO category? Are you wondering what is RTO category in courier? RTO or Return to origin refers to any order that isn’t delivered to the customers and is returned to its origin at the shippers’ request.

In other words, the RTO process is initiated when an order remains undelivered and is returned to the seller’s warehouse. With the obvious mathematics, RTO in courier is an extra expenditure for you. Hence, you must know all about it and follow strategies that will reduce such cases for your eCommerce business.

So, are you curious to know more? Then, take a look at our Return to Origin guide which covers the below pointers.

Reasons for RTO

The increased RTO rate is creating a huge mess for your business profits which can be dreadful when measured, so this should be taken into account, and find the right solution to resolve it. There exist many possible reasons why the purchased order does not get delivered but instead is dispatched for RTO. Following are a few of the possible reasons for RTO:

The customer is not available
The recipient does not approve the package
Wrong customer contact information
COD payment is not ready at the time of delivery
Premises closed at the time of delivery

Ways RTO Impacts your Business

As a D2C brand, you are losing money in many ways over these RTOs in eCommerce and the following are some you can relate to:

Shipping charges for the shipment (forward and reverse)
Quality check and repackaging costs
Product damage
Costs in the handling of recalled inventory
Locked Inventory
Disposal/Scrapping Cost
Loss of probability
Cost of client turnover
Extra operational costs are required for processing returned/cancelled orders

How to Analyze the RTO Rate

Analyze your RTO rate by calculating the losses and segmenting them according to the products, which are in huge demand, and which are returned often. You need to identify the issues that the majority of customers are returning the same product, this can include product quality or pricing or any other factor you can work on to make it better and consumable. Also, you can segment the RTO rate you receive by region, to know from which pin code(s) the products are majorly undelivered or returning to their origin at shippers.

How to Reduce RTOs

Pre-sales

Improve Product Quality

Firstly, analyze the reasons why the particular products have a high RTO rate or why were customers dissatisfied with the product. Now, work on improving product quality as half of your job to reduce RTO will get done here. If the customers are satisfied, what else do you want?

Incentivize Pre-paid Orders

Non-genuine buyers and the COD payment method conclude 60% of the RTOs. Start incentivizing your customers for pre-paid orders, offer them discounts or cashback, or ask for a COD fee to pull down the choice of COD payment method and reduce the RTO rate. Why? It is simple as when customers pay in advance they are somewhere bound to receive or accept the order.

Offer Discounts & Free Gifts

While packing the order, you can add freebies or discount coupons to your customers. This will enhance their experience and will reduce the chance of returns. Who doesn’t like a freebie? We all do. Hence, you ought to surprise customers sometimes to build your brand value.

During Order Processing

Detect High-risk Orders

Make it a practice to check the risk of fulfilling orders before starting their fulfillment operations. Detect high-risk orders either to confirm the authenticity of the order or avoid fulfilling it. Check the customer’s past purchase history to confirm if he/she is not in habit of returning/not receiving the ordered products, if they returned the order every time when COD applied, or any other fishy thing. Make sure to re-confirm the order via IVR or email or call. Also, put an automated IVR to confirm the authenticity of the order every time you receive it with COD as a payment option.

Provide Fast Shipping

A hassle-free and fast delivery experience will decrease the chance of returns as most of the time customers become impatient and end up purchasing the product from the offline market and then returning the product that they purchased online. The easiest way to tackle that is by providing super-fast delivery services.

Post-sales

NDR Management

After the order delivery is executed and the customer is not available at the address or he/she is not ready with the payment in hand; instead of marking it as RTO, take follow-ups for re-attempt of the delivery from your customers.

How Shipway can help you Reduce RTO

Shipway’s AI-powered logistic platform is the best solution for all those who are seeking answers to ‘how to reduce RTOs. Check out our below pointers and know more about the ‘how’!

COD Fraud Detection

With Shipway, you don’t have to worry about your orders getting undelivered due to fraudulent orders. You can auto-detect risky orders through our AI-powered tool and mark them as medium or high-risk orders. For all risky orders, either you can choose whether you want to move forward with them, or use our OTP and WhatsApp-based COD order confirmation services which help you to reduce the risk by getting a confirmation from the customer. Furthermore, you can even convert risky COD orders to prepaid orders.

Fast Shipping

We provide order fulfillment automation which helps you increase your order processing speed and allocate couriers faster and more smoothly. This will lead to improved shipping speed, and your customers can easily receive the product on the delivery date.

NDR Management

Last but not least, you can reduce RTO percentage via unified non-delivery follow-ups & NDR management with Shipway within a few clicks. You can check out all the RTO cases in the NDR panel on the Shipway dashboard and then take action on whether you want to reattempt the delivery or not. Apart from that, you also get the option to send a notification to the customers for delivery re-attempt confirmation. Similarly, even customers can browse the order lookup page and add a new delivery date and time. In short, you can do it all with our shipping automation app.

Now that you know about Return to Origin, let us help you retain customers and increase your profits by eradicating the RTO issues.