It’s the festive season, and for customers, it’s the time when they can shop for their favourite brands with the best offers. These offers can be product-specific, brand-specific or sometimes website-wide.

But this comes with a fear for brands. The fear of understanding how to reduce RTO in eCommerce.

Though this seems like the best time for D2C brands to capitalise on gaining more customers with offers, there are a lot of unseen challenges:

1. Handling sudden spikes in delivery
2. Inventory management
3. Competitive pricing
4. High returns by customers, 
5. And How To Reduce Return To Origin Shipments.
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Standing out in the competitive market might seem tough, but if executed right, you’ll have a higher retention rate and, hence better profits.

A lot of the brands that we speak to daily have one thing in common that haunts them.

All of them had great offers, they even had a huge inventory to fulfil all the orders, and their delivery partner was also quick in delivering things, but many of their orders were being returned or let us say - had to be returned.
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Result? Higher Return To Origin orders, meaning those orders bring in an extra expense without giving a single penny to the brand.
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So, you might ask us, can’t we reduce RTO orders?

We’ll say, yes, you can!

So, let’s dive into how you can reduce RTO shipments.
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What is Return to Origin?

Return to Origin (RTO) refers to the process of a shipped package being returned to its place of origin, which is typically the seller or the e-commerce company's warehouse or distribution centre. 

In simple words, whenever a shipment is returned to a seller instead of being delivered to the customer, a logistical issue arises; known as Return to Origin, or RTO.
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Such a condition can happen for various reasons from the delivery partner’s side or a customer’s side:

1. Refuses delivery: If a customer refuses to accept the delivery of a package for any reason, the package may be marked for RTO and sent back to the seller.
2. Provides incorrect or incomplete address information: If the shipping address provided by the customer is incorrect or incomplete, the courier may be unable to deliver the package even after multiple attempts, and will finally initiate an RTO process.
3. Fails to collect the package: In some cases, the recipient may fail to pick up the package from a local post office or courier service location within the stipulated time frame, leading to an RTO situation.
4. Returns a product: When a customer initiates a return of a product they've purchased, the item is sent back to the seller's return location, which is again a reason for initiation of an RTO process.
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The process of handling RTO shipments involves processes such as:

1. Returning the package to the seller
2. Inspecting the contents
3. Deciding on appropriate actions:

1. Reshipping the product to the correct address
2. Processing a refund
3. Or addressing any issues that led to the RTO.
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Efficient management of RTO is important for e-commerce businesses as it helps minimise costs and ensure customer satisfaction. 

To resolve the issues leading to RTO and facilitate successful deliveries, there should be a line of clear communication between the e-commerce company, and shipping carriers, to successfully deliver the product to the customer.
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How To Reduce RTO (Return to Origin) in E-Commerce?

By this time, you must be quite well aware of how RTO potentially incur losses to your brand. 

Hence, you need to take steps so that you receive fewer return requests, be it due to customers or delivery partners.
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We’ve collated a list of how to reduce RTO in ecommerce:

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How to reduce RTO in e-commerce

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Method 1: Identifying and blocking underperforming pincodes

Pincodes associated with high RTO percentages should be restricted. 

Make sure that before blocking any pincode, your team analyses historical data on specific product listings, categories, and resellers, and even evaluates the past RTO performance of all courier services in these areas. 

Such problematic pincodes can then be flagged as underperforming. 

Now Pragma’s RTO Suite will give you a comparison of the fulfilment rates for various delivery partners on that underperforming pincode and you can route the orders for that specific pincode via a delivery partner with a higher fulfilment rate.
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Method 2: COD verification

With a COD verification feature in place, you can make sure to have verified every one of your COD orders before it is sent to the seller/warehouse.

This includes verifying the user’s number by calling or SMS, helping in flagging impulsive purchases, and helping your team to take immediate action.
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In general, the businesses that work with Pragma use many customisable features to either reduce COD orders or verify them. A few of them are:

1. COD purchases can have different coupons at checkout.
2. Since timeliness is an important factor in e-commerce, you can play around with the delivery date that tempts users to choose a prepaid mode.
3. You can keep COD options only for repeat customers, or users who are purchasing for the first time with you.
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Many brands even skip the COD verification for their loyal customers helping in better customer retention as well.

If returns still arise, the brand can issue wallet refunds, or simply coupons for the customer to shop again instead of a full refund.

With businesses in the D2C space losing due to COD orders, Pragma helped Emami reduce losses for its COD payment method, where COD accounted for 85% of all their purchases.

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Method 3: Provide a better after-purchase experience

Try to enhance the post-purchase experience by offering continuous support whenever your customers need it. 

Keep them informed in real-time regarding the progress of their order, including updates during transit, packing, and delivery. Be sure to promptly alert them if there are any delays in order delivery or other exceptional situations.

Method 4: Address verification to reduce RTO

Incorrect or incomplete addresses provided by customers significantly contribute to RTO cases. Several address validation checks can be employed such as:

• Scrutinising address character length
• Checking for missing landmarks
• Ensuring address-pincode alignment
• Verifying the accuracy of mobile numbers, etc.
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When an incorrect or incomplete address is identified, immediate communication will be initiated with the customer to rectify the issue before dispatching the shipment.

This can significantly increase the likelihood of successful delivery. In cases where a correct address is not obtained, it's advisable to cancel the shipment before dispatch to avoid unnecessary shipping costs.

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Method 5: Implementing a return policy for your brand

You need to filter return requests because not everything that a customer buys can be returned.

You can put restrictions such as:

• All electronics above INR 5,000 will be routed to the service centre, instead of the e-commerce brand.
• Specific items in clothing like innerwear can’t be returned.
• 7 days return period for specific items
• Issuing coupons/wallet refund instead of full refund.
• A strict exchange policy instead of return.

Method 6: Delivering orders faster

When a logistics partner picks up an order, they promise a certain delivery date to the customer - generally known as the Estimated delivery date.

But when the delivery partner fails to deliver the product by this date, there is a high chance that a customer might change their mind, cancel the existing order, and place a new order from another e-commerce website. 

You should ensure that the logistics partners are given tight targets for the first attempt within the specific delivery date, helping brands reduce RTO orders.

With customisable features on Pragma’s RTO Suite, brands with the help of delivery partners can allow their customers to select a date and time of delivery that makes sure the customer is available to collect the parcel. 

Another simple option is to provide the delivery person's number to the customer for easy coordination with the delivery partner.

Other methods to reduce RTO orders are:

1. Introduction of the size chart & product video
2. Prioritise customer reviews
3. Allow exchanges instead of refunds
4. Risky order detection and tracking of fake deliveries
5. Scrutiny for customers with a high RTO percentage
6. Automate Non-delivery reports
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Why are RTOs the biggest challenges for e-commerce brands?

As we mentioned about how to reduce RTO in ecommerce in the above section, RTO can have significant impacts on the daily operations of an e-commerce business.
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Let’s understand how exactly an RTO order brings additional work for your brand:

1. Increasing operational costs 

RTO can be costly for e-commerce businesses, as they need to bear the cost of:

1. Return shipping
2. Restocking
3. Refunding the customer's purchase price

This can eat into profits and increase operational expenses.

Why we say so is because Return to Origin makes up over 20-30% of all orders, which means your business can straight-up lose 20% of possible revenue gained.
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Return shipping costs

• E-commerce businesses often bear the cost of return shipping for RTO orders. 
• Managing and covering these shipping charges can be a financial burden, especially if return rates are high. 
• It requires effective cost management and negotiation with shipping providers to minimise expenses.
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Tracking and verification

• Ensuring that RTO items are shipped back to the correct origin and arrive on time can be challenging. 
• This involves tracking shipments and verifying their status, which may require additional resources and coordination.
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2. Managing reverse logistics 

E-commerce businesses need to have reverse logistics processes in place for managing RTO the shipments. This system handles the collection of returned items, whether it's for restocking, recycling, or disposal. 

Another important part of Reverse Logistics is to manage the inventories. What this means is that the returned product should be automatically routed to an inventory such that the condition of stockouts or overstocks can be avoided.

These returned items then need to be inspected, restocked, or refurbished if necessary.
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3. Deteriorating customer experience

How efficiently and seamlessly an e-commerce business manages RTO can significantly impact the customer experience. 

A smooth and hassle-free return process can enhance customer satisfaction and loyalty, while a cumbersome or lengthy process can hold customers back from making future purchases.
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4. Product quality and packaging

Frequent RTO can be an indicator of issues with product quality or packaging. This means businesses need to continually assess and improve these aspects to reduce return rates and maintain customer satisfaction.

How e-commerce businesses handle RTO, including their returns policy, logistics, and customer service, can make a significant difference in their success and sustainability in a competitive market.

Hence, brands must have an RTO Suite in place, such that it can:

1. Analyse data that helps flag impulse buyers, fake orders and orders made by bots.
2. Auto-verifying pin codes, addresses, numbers, etc.
3. User risk assessment to check for fraudulent behaviour, etc.
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With Pragma’s RTO Suite, brands can analyse & detect RTO losses before they occur and reduce overall RTO losses by 60%, hence imparting them knowledge on how to reduce RTO in ecommerce.

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Why should e-commerce brands reduce RTO?

We know that RTO orders are difficult for D2C brands as they add extra cost and administrative overhead for the brands.

This even means if the brand doesn’t have a proper process in place, it could impact the customer experience negatively. 

Let’s understand some major reasons why brands find it difficult to manage return orders:

Repackaging costs

• RTO items often need to be repackaged and restocked before they can be resold. This incurs additional labour and packaging costs. 
• E-commerce businesses need to have processes in place to manage these tasks, which can be time-consuming and costly.
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Damaged product during transit

• When items are returned, e-commerce businesses need to inspect them for damage or defects. Identifying and documenting the condition of returned items can be a labour-intensive process. 
• Decisions must be made on whether a returned product can be resold, needs refurbishing, or should be discarded.
• Customers may dispute the condition of returned items, leading to potential conflicts and additional customer service efforts. Resolving these disputes can be time-consuming and may impact customer satisfaction.
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Expiration of time-sensitive products

• For businesses that deal with perishable or time-sensitive products (e.g., food, cosmetics, medications), managing RTO orders becomes even more challenging. 
• These products may expire or deteriorate during the return process, resulting in potential losses and waste.
• Properly tracking expiration dates and managing inventory to ensure that products do not expire before they can be resold requires careful planning and monitoring.
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RTO orders are difficult to manage as they can have financial, logistical, and customer service implications, making it essential for e-commerce businesses to implement efficient processes and systems for handling returns.
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Reasons for RTO in e-commerce business

How to reduce RTO in ecommerce can account for a variety of reasons, and these reasons may vary depending on the specific products, business practices, and customer base.
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Some common reasons for RTO in e-commerce include:

• Wrong address or delivery issues
• Refused deliveries
• Product quality issues
• Sizing and fit
• Missing parts or accessories
• Product description discrepancies
• Late or delayed delivery
• Expiration dates
• Warranty or repair request
• Unclaimed packages
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As an e-commerce brand, the reasons for initiation of an RTO order depend on the type of product you sell, ticket size, etc. 

Hence it becomes important for your brand to make sure that you avoid all RTO issues from your end like late delivery, and quality-related and aim at providing a superior quality product.

This will help you reduce the RTO reasons like product quality issues, sizing issues, etc.
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Helping you choose an RTO Suite

Have you realised the importance of an RTO suite yet?

With an RTO suite in place, it helps you reduce returns and with Pragma’s RTO Suite, within 200ms from order placement, our AI algorithm scans 300+ parameters to identify & flag risky orders in real time.
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Result?

1. Brands have increased prepaid orders from 25% to 35%, 
2. 60% Reduction in RTOs
3. 35% Reduction in NDRs
4. Reduce info-related RTOs by 45 to 60%

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