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7 profitable strategies for RTO management
Order fulfilment

7 profitable strategies for RTO management

Yukta Anand
October 21, 2022
mins read

Returns are a routine part of the ecommerce business cycle; according to research, 20%-30% of all ecommerce orders are returned. In addition, customers have become accustomed to liberal return policies; they want quick returns with no questions asked.

As returns are so common, it is imperative for ecommerce brands to have a well-defined returns policy. What is even more important is a returns management system that helps ecommerce sellers ensure cost-effectiveness.

One common type of return is RTO (return to origin), in which an order is either undelivered or returned by the customer and is sent back to the seller’s address. RTOs are expensive and cumbersome for ecommerce sellers as they have to pay for both forward and return shipping. Luckily, RTOs can be effectively reduced through a few simple steps.

Let’s take a deep dive into RTO management that is efficient and cost-effective.

In this blog, you will learn about RTO, the reasons for RTO, why ecommerce sellers should reduce RTO and the ways to do so.

What is RTO?

RTO or return to origin means that an order was returned by the customer or was undelivered and was sent back to the seller’s address– most often, an ecommerce warehouse.

Let's take an example,

Your ecommerce brand has three warehouses in India—Haryana, Mumbai and Kolkata. You received an order from Mahabaleshwar. The order was fulfilled from the Mumbai warehouse. At the time of delivery, the recipient was not available at the address, even after three delivery attempts. Therefore, the order is now marked as an RTO by the shipping carrier and has to be returned to the warehouse it originated from, i.e. Mumbai warehouse.

What are the reasons for RTO?

Understanding the reasons behind RTOs can help ecommerce sellers prevent it and save on the additional costs associated with it. The possible reasons for RTOs are:

1. Incorrect address information

The most common reason for RTO is wrong address information given by the customers. For example, there may be a spelling error in the address, or the address may be incomplete or incorrect, making it difficult for delivery partners to find the address. In such cases, the order is returned to the ecommerce warehouse.

2. Unavailability of the customer to receive an order

If the customer is not available at the provided address to accept his order, the delivery partner would have no alternative but to return it to the seller.

3. Customer intent

Customers may return the order because they do not like the quality of the product, size issues, or customers simply change their minds. Sometimes customers need a product for a special occasion. If the order isn’t delivered by the required date, they do not accept its delivery. Moreover, there may also be situations when the customer wanted to cancel the order but was unaware of the cancellation process or simply forgot about it and refused the delivery.

4. Fraudulent orders

Sometimes customers order products with bad intentions and deny accepting the package. For example- customers may order similar products from multiple ecommerce sellers to choose the one that arrives the fastest or the one they like best.

5. Failure in re-attempt of delivery

When an order is not delivered (due to the above reasons), the delivery partner usually re-attempts delivery a few times. If the order cannot be delivered even after numerous re-attempts, it is sent back to the ecommerce warehouse.

Why should ecommerce sellers reduce their RTO?

RTOs are cumbersome and non-profitable for ecommerce businesses. Ecommerce sellers should reduce their RTO due to the following reasons:

  • Additional costs of forward and return shipping
  • Operational costs such as quality checks, cost of refurbishment, cost of restocking
  • Inventory gets stuck as products stay in-transit
  • Higher probability of damage to the product
  • If the product is perishable, it may expire during transit, leaving you with an unsellable item

How to reduce RTO?

The various ways to reduce RTO are as follows:

1. Ensure post-purchase communication

Numerous orders are sent back to ecommerce warehouses because the customer isn’t available to accept them; one way to combat this is by keeping customers updated about their order status. Active post-purchase communication keeps customers informed about the expected delivery date, which increases the chances of the customer being available to accept the delivery.

For instance: Eshopbox sends proactive notifications at various stages of order processing through email, SMS or both to let customers know where their order is and when it will be delivered. Eshopbox also allows D2C brands to create a branded order tracking page which delights customers with real-time order tracking.

Eshopbox sends proactive order notifications through email, SMS or both
Eshopbox sends proactive order notifications through email, SMS or both

2. Allow customers to choose a preferred delivery time

If customers can choose their preferred delivery date and time, it increases the chances of a successful first delivery attempt by increasing the probability of customer availability for delivery.

For instance- Customers can re-schedule a delivery and change their delivery information on Eshopbox’s customer portal. Eshopbox also checks customer availability for order delivery through automated calls and messages, thus increasing the chances of a successful first-delivery attempt.

Eshopbox’s customer portal let’s customers reschedule delivery
Eshopbox’s customer portal let’s customers reschedule delivery

3. Check address details before shipping the order

Sometimes the address given by the customer is incorrect or vague, which can make it difficult for delivery partners to locate it. Ecommerce sellers can check the address information before shipping the orders to avoid problems arising due to wrong addresses.

In case of ambiguity in the address, you can generate automated calls to check the information and get necessary inputs.

4. Incentivise pre-paid orders

One out of every three COD (Cash On Delivery) orders remains undelivered in India. In COD orders, customers have not invested any money and thus have nothing to lose. COD orders have a propensity to RTO.

Ecommerce sellers can incentivise pre-payment of orders to reduce the chances of RTO. You can give incentives such as-

  • Discounts
  • Free shipping
  • Product sample
  • Coupons

5. Quickly ship orders

If a customer has ordered a product for a specific occasion, but the ecommerce brand cannot deliver it within time, the customer will refuse to accept the delivery. Moreover, lightning-fast shipping is a standard expectation of customers these days.

Due to the above reasons, it is crucial for ecommerce brands to ship orders as soon as possible. You can ensure fast shipping and delivery through the following steps:

For example- Eshopbox leverages its distributed network of fulfilment centres to ship orders at a lightning-fast speed. Eshopbox uses intelligent order routing to automatically allocates orders to the nearest fulfilment centre and ensure quick delivery. Eshopbox has an automated and streamlined pick-and-pack process. Also, Eshopbox’s SOP  (Standard Operating Procedure) driven process strictly adheres to the marketplace’s SLAs (Service Level Agreements).

Eshopbox has a distributed network of fulfilment centres
Eshopbox has a distributed network of fulfilment centres

6. Ensure high order accuracy

23% of customers cite the wrong product as the reason for return, thus highlighting the importance of order accuracy. Moreover, high order accuracy benefits ecommerce sellers by increasing efficiency and the credibility of the brand.

Ecommerce sellers can ensure high order accuracy by using technology in order processing and having a streamlined pick and pack process.

Let’s look at the example of Eshopbox:

  • Eshopbox uses technology like conveyor belts and RFID tags to automate order processing and reduce errors.
  • Eshopbox has a robust pick and pack process with 99.75% order accuracy rate.

7. Provide proper packaging

A torn or spoilt package leaves a bad first impression on the customer. If a customer receives a damaged package, he may not accept delivery because he believes the product inside is also damaged.

You can think of your product’s journey from the ecommerce warehouse to a customer’s location and base your packaging on that.

Ecommerce brands can ensure proper packaging by-

  • Choosing the right package size
  • Wrapping products properly
  • Using appropriate and secure dunnage
  • Using the fragile shipping label on packages of such products

For example- Eshopbox’s trained staff packs all orders properly to deliver them in excellent condition by minimising chances of in-transit damage. Moreover, you can customise packaging and even use sustainable packaging with Eshopbox.

Summing up

RTO management is essential for ecommerce brands to save unnecessary costs and ensure good profit margins. By analysing the reasons behind RTOs, and taking the right steps, ecommerce brands can reduce them. A tech-enabled ecommerce platform like Eshopbox can help you manage RTOs in an easy, quick and efficient manner.

Connect with our fulfilment expert today.

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