Ecommerce returns are indeed a double-edged sword. While shoppers love an easy return policy and process, online brands often struggle through costs, commitments, and resources for providing a hassle-free return experience.
Return rates can be minimised by improving your product listings, implementing an ideal return policy and ensuring incredible order accuracy. However, you need to be careful about the returns that are out of your control and have to be sent back to the warehouse.
In this blog, you will learn what is an RTO order, the impact of RTOs on an ecommerce brand, and the strategies to reduce and manage RTO in ecommerce landscape.
What is an RTO order?
RTO stands for return to origin. It means when an order is returned by the customer or was undelivered, it is returned to the warehouse it was picked up from.
Let's take an example,
An ecommerce brand receives an order from Pune. The brand stores its inventory across multiple warehouses in India to take advantage of multi-warehousing. The order is allocated to the warehouse nearest to the customer location, i.e. Mumbai. However, when the order was to be delivered, the customer was not available. Therefore, the order is now marked as an RTO by the shipping carrier and has to be returned to the warehouse it was originated from, i.e. Mumbai warehouse.
1 out of every 3 orders is returned to the warehouses.
Why RTOs are a nightmare for ecommerce brands?
For any ecommerce brand, RTOs are very hard to handle as it involves various costs like:
Forward shipping and return shipping
Blocked inventory as items are stuck in transit
Quality check and re-packaging of returned items
Refurbishment and restocking of returned product
Operations and resources utilised in order processing
The situation is even worse for cash on delivery orders, as customers refuse to pay for the order. Moreover, you have to bear cash handling charges for COD orders.
Why should ecommerce brands reduce RTO?
It is also worth noting that most RTO orders arise out of fraudulent activities and cash on delivery orders. Such return frauds can result in a loss of inventory and profits. Therefore, you must protect your business before they drain out your financial resources. Moreover, higher RTO tells you about the efficiency of your ecommerce fulfilment process. For example, if the RTO is happening because the product is being delivered late, is faulty, or inaccurate, it means you need to optimise the shipping experience.
How can you reduce and handle RTO with Eshopbox?
Ecommerce brands can minimise RTO orders and reduce the impact of RTO in the following ways:
Reducing the overall return rate to eliminate the chances of RTO
Encouraging customers to switch to payment methods other than COD to minimise the financial impact of RTO
Implementing a verification process to check if the customer is available for delivery
Here are the strategies that help ecommerce brands combat RTO:
1. Reduce ecommerce returns
The best way to curb RTO is to eliminate the chances of any return. You can start by:
Focusing on improving the product page with multiple high-resolution images, including detailed product descriptions, and providing dynamic sizing charts. It will ensure that customers have a clear understanding of their purchase and they can have realistic expectations when the order is delivered
Giving special emphasis to order accuracy so that the correct product reaches your customers in a good condition
Including customer reviews on the product page that provides a detailed account of the product's quality and usage
Offering customer support via chatbots, email ID, and contact number so that customers can resolve their issues
2. Provide order tracking
Sometimes customers place an order for a special occasion or a specific event. If the order arrives after the event, the customers might not need it anymore. Apart from ensuring lightning-fast shipping, you can consider:
Providing estimated date of delivery to your customer so that they have an idea of the order delivery
Notifying your customers proactively in case of a delay
3. Offer multiple modes of payment
Cash on delivery increases the financial impact of RTO on an ecommerce brand as customers refuse to pay for the order. Moreover, you have to bear the return shipping charges. To prevent it, you must be:
Providing multiple payment methods like debit cards, credit cards, UPI, digital wallets, and more
Including offers and discounts for digital payments
4. Turn returns into exchanges
RTO causes a negative impact on the revenue of an ecommerce brand. You can easily recapture your revenue by:
Encouraging customers to buy another product when they're returning an order by giving colour, size, and style recommendations with Eshopbox's one-click exchange options
Giving your customers the option to get their refund in their store wallet so that they can purchase something else in the future
Offering immediate refunds for wallets, unlike source accounts that take 5-7 business days
5. Check customer availability and verify details
Failed delivery attempts give rise to RTO, resulting in extra costs due to rescheduling and informing the customer. Here's what you should be doing:
Generating automated messages or calls to connect with your customers and take necessary inputs such as ensuring customer availability and verifying the complete customer address
Leveraging the Eshopbox platform to automate the verification process and empowering your customers to request another delivery attempt or change the delivery address on the customer portal whenever they want, without any assistance from the customer support team
Simplifying returns, exchanges and order cancellations so that customers can do the needful on the customer portal without any difficulty or causing RTO in the first place
6. Distribute your inventory across India
With warehouses across India, you can not only expedite order delivery but also expedite the speed of RTO. It will help you optimise reverse logistics, i.e. restocking the returned products in the available inventory and making them resellable quickly. Here's what you must be doing:
Investing in a distributed network of warehouses across India or outsourcing ecommerce fulfilment to a fulfilment company like Eshopbox to leverage their fulfilment centres
7. Combat return frauds
To reduce RTO, it's essential to protect your ecommerce business from returns fraud. Here's what you can try:
Investing in a fraud-protection software that helps you detect fraudulent behaviour and raise red flags
Implementing a quality check at the customer's doorstep
Sending OTP (one-time-password) to the customer to ensure delivery of high-value orders
Identifying fraudulent customers and blacklisting them
Raising a claim when you're selling on marketplaces and the returned products don't pass the quality check
You can reap multiple benefits with efficient return management. If you can handle the process strategically, it might help you reach your goals rapidly. External help will accelerate the process and amplify the results. Finally, it will help you to minimise your RTOs and the losses that come with them and boost your efficiency as an ecommerce brand.