An easy return process will do wonders for your online business.
- 92% of consumers buy from an online store if the return process is easy
- 79% of consumers want free return shipping
But it has a dark side too!
- 30% of all products are ordered online or returned
This means that returns play a big role in the decision-making process when purchasing a product. However, returns aren’t great news for e-commerce sellers. They include huge commitments, shipments, and resources that can drain nearly all of your money from your business. Most courier companies offer high return shipping charges compared to shipping charges.
So obviously as a D2C brand or an eCommerce company, you would want to reduce your return to origin (RTO) orders.
In this blog, we shall understand what RTO is in eCommerce, what are the main reasons behind it, and some effective ways to reduce RTO for your business.
Let’s look ahead at all that we are going to cover here:
Table of Content
- What does RTO means in courier or eCommerce?
- Why is Return to origin orders difficult to manage?
- How Can You Reduce RTO in E-Commerce?
- Implement a Return Policy
- Focus on Quality
- Introduction of the size chart
- Prioritize Customer reviews
- Add a product video
- Deliver faster
- Provide Order Tracking
- Allow exchanges instead of refunds
- Risky order detection
- Automate Business processes
- Offer multiple payment methods
What does RTO means in courier or eCommerce?
RTO in eCommerce stands for Return to Origin.
It means that whenever an order is returned or undelivered, it will be returned to where it was picked up from. In most cases, courier companies ask the sellers if they want to return the order, and the sellers have to pay for the return charges.
Non-delivery of shipments can happen due to various reasons like –
1. Customer is unavailable
2. Door/Office Closed
3. Wrong Address / Contact number
4. Fake Order
5. Customer canceling the order
6. Payment issues
Why are RTO orders difficult to manage?
Ecommerce RTOs are difficult to manage because you have to incur separate charges for them. In most cases, the shipped products may even become unusable due to constant round trips. If the product was the last one in the batch, it is more likely that it will not be used. If the product was sold on Sale and you pay the return shipping fee too, there is a high possibility that you will lose money.
Cash-on-delivery orders make the situation even worse, as the customer may refuse to pay for the order and you have to bear the return shipping costs too.
They don’t really bother much if anything goes wrong (as their money isn’t stuck), so they can either reject the order or refuse to pay.
These RTO-related expenses can negatively impact your company’s bottom line:
- Shipping Charges: It costs money to return the item. If your company offers free shipping, you may factor shipping costs into the overall cost of the product or have worked out a beneficial way with the logistics. But you’ll be responsible for the shipping costs if a buyer returns the item.
- Repackaging Costs: Items that are shipped are placed in suitable boxes with postage and packing slips. Those packages must be unpacked and added back to inventory after being returned by customers. They must then be repackaged before being shipped to a new buyer. This creates a significant overhead cost.
- Damaged Products: Products returned by customers occasionally pass through several warehouses and are transported alongside several other products. Some products will break during this process.
- Expiration: Some products expire after a certain period of time. Others are only valuable at certain times of the year. If you ship an item and it’s lost and found after it’s expired, you’re stuck with something you can’t sell.
How Can You Reduce RTO in E Commerce?
You can save money and help your business by reducing RTO. Here are some steps all business owners can take to reduce RTO.
- Implement a Return Policy
Implement a return policy to manage returns and exchanges. Set expectations for customers about what they can return or exchange and by when. Make your return policy clear to prevent any awkwardness or hurt feelings. Customers will respect a policy when they know they are making an informed decision.
2. Focus on Quality
The higher the quality of the product, the less likely the customer will return it. Nobody wants a defective product, and if clients don’t think you care about quality, they won’t trust your business. And the threat of a return to origin looms in the air. So focusing on product quality goes a long way in avoiding returns.
You can also reduce your RTO by focusing on the quality of your shipping materials. Better packaging to protect your goods means less damage to your goods in transit and no need to replace damaged goods.
3. Introduction of the size chart
Buying clothes online is now run-of-the-mill, but customers can be frustrated by the lack of standard clothing sizes: a size 2 in one brand is a size 8 in another. Also, many brands use proprietary size systems that are not immediately obvious to customers.
Giving your customers access to a size chart makes it easy to see what size clothes you’re selling. They can measure on their own before purchasing. This process helps reduce returns due to incorrect sizing or customers purchasing multiple items to ensure they receive the right fit (yeah, that happens).
4. Prioritize Customer reviews
Set out to identify the “why”, if RTO is a common problem in your business. Best way to leverage customer feedback. Reach out to customers who are returning items with automated emails to find out why they decided to return them. This information will help us determine what we as a business can do to prevent returns.
Incentives for reviews from satisfied customers also help. If a customer likes your product, encourage her to post a Google review with images so other users can consider the review before purchasing. Many customers leave reviews for little things like discounts on future purchases.
5. Add a Product Video
Allowing customers to see how your product works before they buy gives them an idea of ??what to expect. Videos (actual product videos, not ads) help customers know exactly how the product will work or look in use. As a result, fewer customers choose to return products because they didn’t get what they expected.
Myntra has incorporated this approach beautifully in its product gallery. They showcase all the features of the product through a simple video.
6. Deliver Faster
70% of RTO orders are due to delivery delays. Therefore, D2C brands need to speed up the delivery process in order to deliver orders on time.
Faster shipping keeps customers happy with their purchases, so you can reach out to them before their event, reducing the chances of them shopping someplace else.
One way to achieve this is by setting up a store inventory closer to buyers. The best example of this is FirstCry, an online store for kids. They have their outlets set up at all convenient locations for quicker deliveries.
It will help you optimize reverse logistics, which means quickly turning returned goods into sellable goods and replenishing them in the available inventory.
7. Provide Order Tracking
This one seems so obvious but it is actually very effective. Mostly, customers place orders for a particular occasion or date. If the order is delivered after the event, the customer might not need the product anymore. In addition to lightning-fast shipping, take into account:
- Give your customer an expected delivery date during the order itself, so they can get a sense of when their order will arrive.
- Assuring your customers that their orders will arrive on time by providing real-time order tracking and updates is helpful.
- Providing advance notice to your customers in the event of a delay
Bonus Tip: Re-attempt for delivery in case of customer unavailable, if wish to receive their order.
8. Allow Exchanges Instead of Refunds
Simplify the replacement process if your customer is dissatisfied or needs a different product. They invested in your business through a purchase. You can keep them happy by offering to get what they need instead of just returning the product. This way you can increase sales while reducing your RTO.
9. Risky Order Detection
With the trend of digitalization, it became difficult to detect fraudulent orders. Many customers buy online with the intention of returning (or not accepting) delivery. In the case of this scam, they either provided the wrong address or have repeatedly refused to accept orders in the past.
By analyzing this risk factor, e-commerce companies can reduce the operational costs of processing fake orders by up to 30% by detecting fraud before they are processed.
10. Automate Business Processes
As your e-commerce business grows, automation becomes more important. Set up automated workflows to automatically approve or reject red flag orders based on risk factors, saving time and money in the process. Automate order confirmations, collections, and other operations to maximize your business, reduce operating costs, and reduce RTO fees.
11. Offer multiple payment methods
A customer who refuses to pay for an order can significantly increase the economic impact of his return to origin on the online retailer if a cash-on-delivery payment option is offered. Additionally, you are responsible for any costs associated with returns. To avoid this, you should make sure:
- Offer a variety of payment options including credit cards, debit cards, digital wallets, and UPI.
- Includes promotions and discounts for online financial transactions.
Reducing your RTO can save your eCommerce business a lot of money in the long run. The majority of RTO orders are fraudulent.
An efficient return policy offers several benefits. Being able to manage processes strategically can help you reach your goals faster. Finally, it helps you minimize your RTO and associated losses and increase your efficiency as an e-commerce brand.
Reducing returns is the most important aspect for e-commerce businesses to maintain high-profit margins.
Luckily, following the above points will minimize your RTO. They will never be zero though and should be factored into business calculations.