on 3 March 2023 / 0
Are you selling online? Your customer will look for a free return policy before sealing the deal. Return shipment, also known as Return to Origin (RTO), is one of the biggest risks in online and offline retailing. A KPMG study on RTO in shipping revealed that Return to Origin in eCommerce can go up to an unholy 40% in orders where the customer has opted for Cash on Delivery (COD). In India, Times Of India reported that 1 in every 3 post-paid cash orders ends as a return shipment. Let us find out how we can reduce RTO rates in online and offline transactions.
Why do RTO rates climb up?
Every time a shipment gets returned, it tends to accrue costs for more than one reason. These additional costs have to be accounted for once a case for Return To Origin is registered.
Here is how the RTO rates go up.
- Two-way courier cost for forwarding the shipment
- The additional cost of damage incurred in transit
- Cost of repackaging for next delivery
- Warehousing costs as part of reverse logistics
- Handling charges of cash in COD orders
Tackling RTO rates by enhancing customer experience
With most sellers bundling free returns with their products, the customer is dictating the terms of a sale. Here are some great steps that enhance customer experience and satisfaction and reduce RTO rates.
Incentivising customers for pre-paid deliveries
COD purchases account for the maximum number of returns. Motivate customers who make an upfront payment for their deliveries by offering them rebates and special deals.
Offering customers multiple delivery and payment options
In the age of same-day delivery, it is only natural for customers to expect flexible time slots for receiving a package. Offer multiple payment options, preferably online, to facilitate pre-paid orders.
Updating and verifying customer information
Customer databases should be updated and verified before delivery partners are assigned to prevent RTO in shipping. Use apps or logistics partners who can verify customer addresses and contact numbers for you.
Fast and safe shipping
Nothing beats fast shipping in clinching the deal with a customer. A customer will even be willing to pay more for faster delivery. Fast shipping is incomplete without safe packaging. Damaged products account for the top 3 reasons for Return to Origin.
Clear and transparent details of product and returns
Educate the customer about the product with clear descriptions amplified by visual content. Make your return policy transparent and unambiguous.
Tackling RTO with metrics and automation in logistics
The second part of reducing RTO rates involves making the logistics and pricing of products more accurate. These simple steps can effectively tackle costs occurring in shipping returns.
Include the cost of reverse logistics for more accurate pricing
The cost of Return to Origin should be included while determining the pricing of a product. The cost of reverse logistics – from customer to seller – will also include additional shipping and warehousing charges to reduce RTO rates.
Turn-Around-Time of delivery partner
Picking the right delivery partner is critical in making last-mile deliveries with minimal returns. Seek a shorter Turnaround Time (TAT) while picking a delivery partner. Evaluate the percentage of First Time Attempts (FTA). FTAs reduce RTO costs.
Grade customers and sellers for risky profiling orders
Automated systems can profile customers and prioritise them based on their history of purchases. Blocklist sellers who repeatedly fail on set parameters to avoid risky orders.
Catalogue products based on their ranks
Shortlist products based on the highest-selling and the most returned. Curate a catalogue of products based on the metrics that identify risk factors. Flag or remove products that have a high probability of incurring RTO rates.
EDD and real-time order tracking
Estimated Time of Delivery ensures transparency and earns customer trust. Club it with real-time tracking after purchase to reduce RTO rates.
- RTO in shipping can be tackled by ensuring a hassle-free customer experience. This includes making purchases more customer friendly with multiple payment gateways and delivery slots. Fast and safe deliveries bring down RTO rates.
- Include the cost of reverse logistics in pricing and shipping policies. It will help reduce RTO costs and mitigate the erosion of profit margin. Use automation to grade customers and extrapolate best-selling products to reduce RTO rates.
Are you tired of RTO shipping by customers? Ecom Express is your one-stop solution for reliable logistics and last-mile delivery in e-commerce. Our technology-aided logistics support and reliable delivery partners help reduce RTO costs. Reach out to us at email@example.com.