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Eshopbox's Winning Strategies for Reducing RTO and Cutting Costs in Ecommerce
Order fulfilment

Eshopbox's Winning Strategies for Reducing RTO and Cutting Costs in Ecommerce

Suraj Verma
October 17, 2023
5
mins read

RTO, short for Return to Origin, refers to instances where an order is returned to the seller's address or warehouse. This occurs either when the order cannot be successfully delivered to the customer for various reasons or when the customer initiates a return.

The significance of reducing RTO cannot be overstated, as a high RTO rate can result in increased logistics costs and decreased customer satisfaction. In this blog, we will explore the importance of reducing RTO and discuss how Eshopbox can be a valuable partner in lowering your RTO rate.

Importance of reducing RTO

Reducing Return to Origin (RTO) helps cut costs, make customers happy, streamline inventory management, promote sustainability, and improve overall operational efficiency. Let us briefly understand how:

1. Cost savings

Reducing RTO can lead to substantial cost savings. For instance, by cutting down on return shipping expenses and restocking costs, you can allocate resources more efficiently. This cost efficiency can improve profit margins and allow for investments in other areas of the business, such as marketing or product development.

2. Increased customer loyalty

Lower RTO rates are directly tied to higher customer satisfaction. When customers receive the correct products as described and in good condition, they are more likely to have a positive shopping experience.

For example, if a clothing brand provides accurate sizing information and high-quality images, customers are less likely to return items due to size discrepancies or appearance issues, leading to higher customer satisfaction and repeat business.

3. Increased operational efficiency

Minimizing RTO streamlines operations. When returns are low, your business can allocate fewer resources to managing the return process. You can save time and manpower that can be redirected toward improving other aspects of the business, such as customer service or expanding product offerings.

4. Streamlined inventory management

Effective inventory management is essential for ecommerce companies. When RTO rates are high, it can disrupt the availability of products for other customers. For example, if an online electronics store constantly deals with returns due to damaged items during shipping, it can result in inventory shortages, causing delays in fulfilling orders for other customers.

5. Sustainability

Reducing RTO contributes to environmental sustainability. Lower RTO means fewer items are shipped back and forth, resulting in reduced carbon emissions from transportation and less packaging waste. By minimising the RTO, you can align with sustainability goals and reduce your carbon footprint.

How does Eshopbox help minimise RTO (Return-to-origin)?

Based on a survey, approximately 30% of online purchases are returned to their origin. Addressing this challenge can provide online businesses with a distinct competitive edge. Here’s how Eshopbox can help you in reducing your RTO rate:

1. Eshopbox helps you convert Cash-on-delivery (COD) to prepaid orders

It is worth noting that the majority of RTO orders stem from cash-on-delivery (COD) orders. In the case of cash-on-delivery orders, customers don't have to make any upfront payment, which means they don't have anything to lose. That's why COD orders tend to have a higher chance of RTO.

Here’s how Eshopbox combats it:

Step 1: Customer Communication: When we receive COD orders, our system promptly sends notifications via email, SMS, or WhatsApp. These notifications encourage customers to make prepaid payments and highlight the advantages of switching to prepaid.

Step 2: Incentives for Conversion: At the seller's discretion, customer communications may include discounts, promotions, or loyalty points to entice customers to switch to prepaid services.

Step 3: Seamless Payment Options: We offer a variety of payment gateways and secure transaction protocols to ensure a seamless conversion process.

Sample WhatsApp notification
Sample WhatsApp notification

2. Eshopbox offers quick shipping

If a customer has placed an order for a special occasion, timely delivery becomes paramount. Failure to meet this expectation might lead the customer to reject the delivery, triggering a Return to Origin (RTO) scenario. Therefore, prioritizing fast order fulfilment and shipping is vital.

To enhance the efficiency of your shipping and delivery process, here’s how Eshopbox can contribute:

  • Our strategically positioned fulfilment centres nationwide ensure the efficient distribution of your inventory, resulting in swift deliveries and cost savings.
  • Our Warehouse Management System (WMS) assigns orders to the nearest fulfilment centre.
  • Our 100% scan-based system enables rapid and accurate warehouse operations, including picking and packing, resulting in the expedited shipment of products.

Eshopbox's distributed fulfilment network
Eshopbox's distributed fulfilment network

3. Eshopbox flags risky orders

Risky orders are characterized by a substantial probability of encountering delivery challenges, which can consequently result in higher Return to Origin (RTO) rates. To mitigate this issue, Eshopbox employs data analysis to assess the probability of failed delivery for each order. By taking into account crucial factors like previous delivery history, customer details, and behaviour, it assigns a risk score to classify orders as high, medium, or low risk based on their chances of delivery failure.

The risk score is assigned either low, medium, or high
The risk score is assigned either low, medium, or high

Whenever an order is assigned a high-risk score, we promptly flag it and notify sellers via email, urging them to take immediate action. This proactive approach empowers ecommerce sellers to take necessary action before shipping, thereby minimizing the chances of return-to-origin (RTO).

Eshopbox notifies sellers to take action on orders with a high-risk score
Eshopbox notifies sellers to take action on orders with a high-risk score

4. Eshopbox improves product packaging

Fragile products require specific packing instructions to prevent damage during shipping, ultimately avoiding return-to-origin (RTO) situations.

To ensure compliance, Eshopbox's system promptly highlights each instruction to warehouse staff and requests confirmation. This meticulous process guarantees adherence to the instructions, safeguarding the integrity of the shipped items.

5. Eshopbox offers an easy exchange option

The revenue of an ecommerce brand can be significantly affected by RTO (Return to Origin). Nonetheless, there are strategies to recoup that revenue!

Here are some actionable steps you can take:

  • When customers return an order, encourage them to buy another product.
  • Offer your customers the option to get their refund in their store wallet. This helps in increasing sales and brings back customers.

All this can be easily done with the help of Eshopbox’s branded customer portal.

Eshopbox’s branded customer portal allows one-click exchange for customers.
Eshopbox’s branded customer portal allows one-click exchange for customers.

Bottom line

Minimizing Return to Origin (RTO) is not merely an option; it's a crucial necessity. Failing to do so can lead to higher shipping expenses and negatively impact customer loyalty. At Eshopbox, we offer end-to-end fulfilment and logistics solutions to help you minimise RTO rates.

Eshopbox equips you with all the tools you need to keep the RTO rate to a minimum and embrace a future where your ecommerce business thrives, all while saving the planet one return at a time.

Contact us today to learn more about our services!

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