Reversing RTO losses ASAP

Returns are a part of any eCommerce business. But on an average, brands can avoid at least 25% of RTOs, by having certain parameters in place throughout the customer journey stages.

RTOs - the Good, the Bad, and the Ugly!

Returns are a part of any eCommerce business. When you think RTO, you think cost drain, but many are now looking at returns as a way to improve purchase experience, customer loyalty, and competitiveness. Which has led to a more lenient policy, driving return rates to unprecedented levels. 

RTOs thus make up a very challenging and resource-consuming procedure.

This brief dissertation aims to analyze and characterize the present state of RTOs in the Ecomm-universe, pinpointing areas of opportunity and proposing cost-saving solutions to reduce said returns. 

[ FYI, to those who may need - RTO stands for “Return to Origin”, and is defined by the cancelation of shipping, and therefore the request for return - one that happens before the item reaches the customer or is requested by them for a return due to any fault. For an RTO to be initiated, a post-order reason will have to be triggered. After the respective delivery provider is informed, the package is identified and tagged to bring delivery to a halt. And dispatched to its origin location. There are also times where the RTO is triggered too close to delivery and the lag between the trigger and respective parcel identification is not enough for the delivery process to be halted - leading to a wrongful delivery. ]

The Reasons Behind RTOs Include -

Customer Request

Occurs when the customer contacts your Customer Service to cancel the order while the package is still in transit. 

RTO by Fraud

Occurs when fraud is detected while the parcel is in transit.

RTO by Retailer

The Retailer, due to human or other error might send a wrong item size, color, etc., only realizing this after the order has been shipped. Retailers contact Partner Services to highlight the instance and bring it to a stop.

In any case, a delivery performed after an RTO is issued is one that should be avoided at all times.

Firstly, you need to grasp the
Ugly side of RTOs - which is that they can never be completely eradicated. Basically because of its sheer volume and randomness. And with COD orders at their all-time high, RTOs are inevitable, be it an established eCommerce business with all the resources, or a small new retailer.

  • Returned orders by users represent around 20% of total orders.
  • Returned orders due to a wrong address and other human errors are 10% of all RTOs.
  • Over 70% of RTO orders are COD purchases, meaning, the retailers can’t take a fee for late order cancellations like they can for prepaid orders.

The major entities in our Ecomm-universe swipe RTOs under the rug for just two reasons:

One - It’s the cost of doing online business
Two - Reducing RTOs requires a regular influx in resources, both in finance & manpower 

Let’s make one thing clear, reducing cost per return is not what the present era should strive to achieve when they skipped the step where we can identify what leads to an RTO - And correct the error or eliminate it.

This is how you wash out the ugly, create some extent of control, without moving a muscle while doing it - if possible!

Now let’s bring the Ugly down a bit - to Bad; because the only way, we get there is a step at a time. 

Have you come across the phrase “Nature vs Nurture”?

The Nature of eCommerce would seem like; to churn out customer problems or issues mainly due to logistics. Why? Because of the sheer scale of it all.

That is why we need Nurture. And by that we mean a system, to monitor, analyze, and assimilate information in real-time - This is where nurture begins, being able to identify the cause enables you to take further steps, to initiate surgical action.

But there is no widely accepted or followed action response to RTOs in the Ecomm-universe, or at least not one that can be integrated into an existing system.


There have been great advances in the field of Machine Learning and Artificial Intelligence, this is the Good aspect of today’s tech. Through which we have come forward with a well-researched solution - With the help of Pragma’s algorithm, you can detect RTO causing agents; verify the authenticity of orders in real-time so that RTOs can be prevented, if possible.

What are the major advantages?

  • The system is completely Automated.
  • Possible RTOs are detected early, some as early as even before a purchase is processed.
  • Data gathered helps red flag fraudulent users.

How does Pragma effectively carry it forward?

Through “Pragma RTO Reduction”, an algorithm tool, you get over 300 layers of verification protocols - to effectively cut down RTOs. Let's take a look at a few.

  • Customer info check -

    Here, details such as address and phone number are verified. And if the delivery address is a temporary address such as a hostel, resort, PG, etc, then the order is automatically flagged.

  • Prior data analysis -

    Most orders are not first orders, meaning, there is pre-existing information on previous purchases (from various eCommerce sites).

    ‘Pragma Analyze’ can now tell the number of previous order cancellations if the same order was placed in multiple sites etc., and red flag orders if suspicious - this way you can review the flagged order and accept or reject them.

  • Log data analysis -

    This step is to reduce impulsive purchases, which directly impact RTOs when they fall under the COD mode of payment - if the order is not received, the product will have to be shipped back and the seller would incur losses.

    To avoid that, ‘Pragma Analyze’ would use the duration of the consumers' time on your site along with other data to make the decision.
  • RTO reduction through NDR services

    Rendering quicker solutions to avoid NDRs.

    In case of unavailability of the consumer during delivery or any other issues faced by the delivery partner, a message is sent to the consumer asking if they need to reschedule the delivery.

    Vice versa, if the consumer is present, yet the delivery partner has not delivered; then a message is sent to the delivery partner to confirm the issue.

    Since communication happens in real-time, the solutions are almost immediate.

Now you know some of the criteria based on which Pragma flags risky orders and corrects all human error. But there are various other layers involved for every single order to make sure the chances of an RTO are drastically reduced - Analyzing based on 90+ parameters for each order.

Note: Pragma doesn’t just flag orders, but it also provides you with the information as to why they were flagged. And you can choose how the flagged orders are handled based on severity.

COD orders have a greater level of risk, and that’s where the Pragma RTO Reduction tool shines & that’s where you benefit the most.

Also, a tech-driven system that nullifies human error builds consumers’ trust in the brand. 

And that is exactly what our service strives for with every upgrade - to put a full stop to RTOs.

To Wrap it up…

We have effectively sifted through a major issue -

Discussed ways to successfully overcome the adverse effects of returns through the means of AI automation. Thereby concluding that RTOs are not impossible to eliminate. All you need is the right assistance. 

Talk to our experts for a customised solution that can maximise your sales funnel

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