While customers enjoy the freedom and convenience of return policies offered by eCommerce sellers, managing a heavy volume of returns is a nightmare for online retailers. This is simply because the process triggers the entire chain of cumbersome events from the warehouse to delivery and takes a lot of time and resources on the seller’s end.
In this blog, we explore the multiple reasons why a package is returned to the seller and the top 5 ways you can use to reduce RTO in eCommerce.
What is RTO in eCommerce?
RTO or Return to Origin primarily refers to the process in which an order never reaches the end customer and is returned or sent back to the warehouse because of different reasons. RTO is the non-deliverability of a courier to the buyer and its subsequent return to the seller.
RTO in eCommerce is calculated as
A study by KPMG suggests that return shipments can make up to a worrying 20% of total eCommerce shipping. This rate can further climb to a massive 40% in the case of cash on delivery (COD) orders.
How does Cash on Delivery Lead to RTO Losses?
As per an article published in The Times of India, nearly 70% of the eCommerce customers prefer cash on delivery as their payment method. This percentage goes up to 90% in case of the online buyers in rural India.
Along with cash on delivery comes the challenge of RTO. 1 out of every 3 COD orders are returned to the seller. Let’s understand the reasons that lead to this.
What are the Common Reasons of RTO in eCommerce?
Some of the top reasons that contribute to a business’ RTO rate are:
- Unavailability of the customer to receive the delivery
- Delivering wrong product
- Difference between displayed (on website) and delivered product
- Incorrect address/contact details of the customer
- Product failing to match customer expectations
- Courier company’s negligence or human error
Irrespective of the reason, RTO can significantly increase handling costs for the sellers as they have to process the returned orders. Here are some of the ways how eCommerce businesses can lose money on returns and cancellations:
- Physical quality check of the product and repackaging of the returned item
- Shipping cost for forward and reverse logistics
- Blocked inventory as items get stuck in transit
- Cash handling charges for cash on delivery orders
- Higher probability of damage to fragile items
- Various kinds of operations and resources cost in order processing
How can you Reduce RTO in eCommerce?
Let’s now discuss some of the most effective ways to reduce the RTO rate or minimize returns for your business.
1. Share crystal clear product information
One of the critical reasons for returns and cancellations is that customers do not have clear information about the ordered product. This results in customers unintentionally buying products that they do not have enough knowledge or information about.
To avoid this, sellers need to provide detailed product descriptions to build brand loyalty and ensure that customers receive exactly what they’ve seen, read, and ordered on the website.
Providing detailed and thorough product descriptions, mentioning the appropriate specializations and distinctive features of the product allows customers to make an informed decision while placing an order, thus reducing unnecessary returns.
2. Offer consistent tracking
Tracking plays an essential role in enhancing customer satisfaction. Regular order updates can significantly bring down customer anxiety while ordering from an unknown website.
Updates through email, SMS, or WhatsApp, help to gain customers’ confidence and reduce the chances of returns and cancellations.
3. Prioritize delivery related preferences
Offering your customers the option to choose their preferred time slots for the courier delivery and other options such as rescheduling the delivery allows you to gain customer confidence and reduce RTO in eCommerce.
You can do this by communicating the date of delivery to the customers in advance. Since the customers already know that they won’t be available at the given time, they can choose the convenient time for delivery when they will be available at the address on that date.
But if you don’t give them an option to choose the date and time of delivery, it might result in a failed delivery. And after a few failed deliveries, the item will be sent back to the source destination by the logistics partner.
4. Verify contact details
It is essential to make sure that the contact information shared by the customer, including phone number, address, and pin code, is genuine and authentic.
To avoid delivery executives facing inconvenience in contacting the customer, it is best to tally all the necessary details before you ship the order, thereby reducing the chances of returns and cancellations considerably.
5. Manage NDR reports
NDR in eCommerce stands for non-delivery reports which give visibility into the order journey and also the reasons for the order getting returned.
This makes the NDR management tool a must for eCommerce businesses. Offering a comprehensive visibility, it allows sellers to take proactive actions to reduce RTO. For instance, if the courier delivery executive states customer unavailability as the reason for non-delivery, the seller can contact the customer to confirm the availability and ensure successful delivery.
Learn more about NDR management toll here.
6. Improve product packaging
Packaging makes the first impression of a brand in the customer’s mind. Poor packaging also increases the probability of product damage, especially in case of fragile items. In such cases, the customer does not accept the product resulting in RTO.
Robust and impressive packaging can help reduce RTO in eCommerce. Businesses can also choose eco-friendly packaging to create a first good impression.
7. Accept online payments
As discussed in the beginning of the blog, most of the orders that result in RTO are cash on delivery. Offering online payment methods significantly reduces the number of returns and cancellations.
Orders paid through net banking, debit or credit cards or UPI are most likely to be successfully delivered reducing RTO rate for the businesses.
8. Offer gifts or discounts
Discount coupons or gifts not only attract customers and increase sales, but also generate customer loyalty.
An order received with a free gift or purchased on discount increases customer satisfaction and helps in lowering the chances of orders being returned.
9. Encourage customer reviews
Encouraging more and more customer reviews and feedback is an excellent practice as it helps you fix the issues and loopholes (if any) for running your operations smoothly.
Apart from this, positive customer reviews also help in building trust among the potential buyers.
Since an increasing number of customers rely on reviews from previous customer testimonials to make their purchase decision, this can significantly reduce return orders for your business.
10. Ensure fast shipping
With multiple eCommerce businesses trying to catch the customers’ attention, customer expectations have increased.
According to a report, 41% of customers are willing to pay more for same-day delivery while 24% will pay extra shipping charges if the product is delivered within one or two hours.
With a pan-India network of warehouses, Pickrr Plus Fulfillment Solution helps eCommerce businesses fulfill same-day deliveries and help reduce RTO in eCommerce.
There is undoubtedly no full-proof way to avoid returns from happening entirely. However, sellers need to have a proper plan for handling returns in the most efficient way possible.
Considering the comfort and convenience of online shopping and relative lack of risk, customers do not hesitate to return items. The strategies shared above, along with partnering with a professional logistics company like Pickrr can completely revolutionize how you can ship a product from one point to another. This allows you to navigate the situation effectively and reduce RTO in eCommerce significantly.