High RTO rates in e-commerce shops has been one of the market’s most undervalued and unaddressed issues. This issue has deterred vendors for many years, but few have grasped its significance. As e-commerce begins to make significant inroads in many regions of the globe, sellers are witnessing a large inflow of orders. We should anticipate an unprecedented increase in the number of merchants and purchasers as India’s internet penetration increases. Therefore, it is necessary to reduce RTO and save brands from huge losses.
As sellers confront a mountain of openings and orders daily, they are often tormented by a common issue, Return to Origin (RTO) orders.
You can reduce return rates by enhancing your product listings, instituting a perfect return policy, and assuring astounding order accuracy. However, care must be taken with returns that are beyond your control and must be returned to the warehouse.
This article will discuss RTO, why brands should concentrate on minimizing RTO, and the best techniques for e-commerce retailers to minimize RTO rates.
What Is RTO (Return To Origin)?
Return to Origin in e-commerce is the procedure in which an order is never delivered to the customer and is returned to the warehouse for several reasons. This process is characterized by the term “Return to Origin.” RTO orders can potentially take on a more critical role as the number of orders that vendors get and their presence grows in Tier 2 and Tier 3 locations.
Why Should E-commerce Brands Focus On Reducing RTO?
According to studies, RTO orders make up one-third of all charges. Because of this, the total amount of money spent on processing these requests may be much higher. Let’s take a look at some of the ways that online businesses might experience financial loss:
- Costs associated with both forward and reverse logistics.
- Restricted Access to Inventory (Items stuck in transit).
- Repackaging and inspection of the returned products for their physical condition.
- There is a greater chance that delicate products can sustain damage during delivery, resulting in additional costs.
- Cash on delivery orders is subject to cash handling fees.
- Costs associated with operations and resources for order processing.
This is why e-commerce brands need to focus on reducing RTO.
It is also important to note that most RTO orders from online retailers originate from fraudulent transactions and Cash on Delivery purchases.
Let’s dive into some of the best practices to reduce RTO:
#1. Provide Order Tracking
Occasionally, consumers submit orders for a specific date or event. The consumer may no longer need the product if the order comes after the occasion. In addition to assuring lightning-fast shipment, consider:
- Provide an anticipated delivery date to your consumer to give them an idea of when their product will arrive.
- Using different customer portals to provide your consumers with real-time order tracking and updates helps instil confidence that their purchases will arrive on time.
- Notifying your consumers in advance in the event of a delay
#2. Distribute Your Inventory Across India
When you have warehouses located all around India, you can speed up the RTO process and the delivery of orders. It will assist you in optimising reverse logistics, which refers to refilling the returned items in the available inventory and swiftly making them resellable.
#3. Combat Return Frauds
To decrease RTO, it is essential to secure your online business against return fraud. You can try the following:
- Investing in fraud-protection software that can help you identify fraudulent activity and indicate potential problems is a good idea.
- Performing quality control inspections right in front of the consumer
- Sending the client an OTP (one-time password) to assure delivery of high-value purchases.
- Identifying dishonest customers and placing their names on a “blacklist.”
- You can file a claim selling on a marketplace if the returned items do not pass the quality inspection.
#4. Turn Returns Into Exchanges
RTO has a detrimental effect on the amount of money generated by an online company. You will have little trouble recovering lost revenue if you:
- Provide consumers with style, colour, and size suggestions using exchange options; you can increase the likelihood that a customer would purchase an additional product while returning an item.
- It would help if you gave your customers the choice of having their refunds placed in their shop wallets so they can make more purchases in the future.
- Wallet reimbursements are processed instantly, unlike source accounts, which might take anywhere from five to seven business days.
#5. Check Customer Availability And Verify Details
Failure to deliver results in RTO incurs additional expenses for rescheduling and notifying the customer. Here’s what you ought to do:
- It is producing automated messages or phone calls to communicate with your customers and collect vital information, such as verifying the availability of the customer and confirming the customer’s address in its entirety, respectively.
- Automate the verification process and allow your customers to ask for another delivery attempt or change the delivery address on the customer portal at any time without the assistance of the customer care professionals.
- They streamline the process of returns, exchanges, and order cancellations so that customers can do the required activities on your customer portal without encountering any difficulties or RTOs.
#6. Offer Multiple Time Slots for Delivery
Diversify options for customers by providing multiple delivery time slots, reducing non-delivery issues due to customer availability constraints. This flexibility not only ensures prompt and convenient deliveries but also cultivates customer loyalty and positive reputation through personalized service.
#7. Offer Multiple Modes Of Payment
Customers who refuse to pay for their orders can significantly enhance the economic effect of RTO on an online retailer when cash on delivery is offered as a payment option. In addition to that, you are responsible for paying the costs associated with the return shipment. To avoid it, you need to ensure that you are:
- Providing various payment options, including credit and debit cards, digital wallets, UPI, and even more.
- Including promotions and savings for online financial transactions.
#8. Make pricing inclusive of the cost of reverse logistics
For RTO delivery, handling returns during busy periods can be a logistical headache. Sellers should adopt a savvy pricing strategy that includes reverse logistics costs for smoother return processes. This approach prepares them to manage return challenges effectively, even in high-traffic seasons, showcasing a commitment to a seamless customer experience.
There is no way to prevent returns completely, except for optimizing your RTO delivery system. Nonetheless, it is essential to establish a strategy for processing returns in the most effective manner.
As an e-commerce business owner, you will undoubtedly have to deal with a certain amount of refund requests. Still, if you take the necessary steps immediately, you can significantly limit this likelihood.
If your business struggles with a high return rate, you may want to consider implementing a conversion optimisation programme. Adaptive optimization is the optimal method for fixing such an issue, especially if the problem’s leading cause has not been precisely identified. Try Wigzo to optimise your conversions.