RTO & Cancellation

Order cancellation is initiated before shipment at the customer's request, while RTO occurs post-dispatch, when a package fails to reach the buyer and returns to the seller. This issue burdens e-commerce with additional costs, with RTO rates reaching up to 30% in some cases, demanding urgent intervention.

This challenge can be addressed through strategic measures at three distinct levels.

  1. Website Level Strategies:

At the website level, proactive measures can be implemented to enhance the accuracy of orders and streamline the delivery process:

  • Promotion of Prepaid Orders: Encourage customers to opt for prepaid orders by offering incentives such as discounts or exclusive offers. Clearly advertise prepaid discounts during checkout to incentivize customers to choose this option, thereby reducing the reliance on Cash on Delivery (COD) orders, which are more prone to RTO.

  • Address Accuracy: Facilitate accurate address entry by providing guidelines tailored to specific regions or countries. Incorporate custom fields for landmarks or specific locality details to aid delivery personnel. Additionally, validate pin codes and phone numbers in real-time to minimize addressing errors. Tools like Gokwik, Magic Checkout, Simpl etc  can be use to avoid any fraudulent order placement  

  • Transparent Delivery Timelines: Display standard delivery timelines prominently on product pages to manage customer expectations. Transparent communication regarding delivery estimates helps prevent orders from being placed erroneously, subsequently leading to RTO instances.

  • Clear Policies: Explicitly outline exchange and return policies to mitigate misunderstandings and reduce the likelihood of returns due to dissatisfaction or misunderstanding of terms.

  • Selective COD Availability: Disable COD options for regions or pin codes with historically high RTO rates. By limiting COD availability, businesses can focus on prepaid orders, which exhibit lower RTO rates.

  1. Marketing Level Strategies:

  • Geographical Exclusions(Logistic/RTO Prone): Exclude regions with historically high RTO rates from marketing efforts to minimize the likelihood of attracting problematic orders. This could involve excluding specific cities, states, or pin codes from campaign.

  1. Operational/Logistics Level Strategies:

Efficient operational and logistical practices are instrumental in minimizing RTO occurrences:

  • Post-Order Engagement/Order Confirmation: Maintain communication with customers post-order through SMS or email notifications. Additionally, consider verifying orders with customers via phone calls, especially for high-value or potentially suspicious orders. Try convincing the customer to pre pay the billing amount by offering some extra discounts through SMS, email notifications etc

  • Optimized Delivery Periods: Prioritize shorter delivery periods to minimize the window for order cancellations or returns. Timely deliveries enhance customer satisfaction and reduce the propensity for RTO incidents. (ideal 5 days, Exceed more than 7 days)

  • Proactive Delivery Confirmation: Ensure delivery partners contact customers prior to delivery, confirming the timing and ensuring successful receipt of the order. Implement re-attempts for failed deliveries to minimize RTO instances due to missed deliveries.

  • Utilization of Fraud Detection Tools: Leverage third-party applications like Third Watch, Payfy etc to identify and mitigate fraudulent transactions before shipping. By preemptively verifying customers and orders, businesses can reduce the occurrence of RTO.

By implementing these comprehensive strategies across website management, marketing endeavors, and operational logistics, e-commerce businesses can effectively minimize RTO occurrences, thereby bolstering operational efficiency, reducing costs, and enhancing customer satisfaction. Embracing a proactive approach to RTO mitigation is imperative for long-term sustainability and success in the competitive e-commerce landscape.