Everything You Need To Know about The RTO (Return To Origin) Shipping Charges

In the fast-paced world of eCommerce, every click and purchase counts, order returns are a vital aspect. Among the many technical terms that can be a bit overwhelming for sellers, “RTO” (Return to Origin) stands out as particularly significant.

Understanding the ins and outs of RTO can make or break an eCommerce business. This article is your guide to unravelling the mysteries of RTO, offering valuable insights into the world of eCommerce package delivery and logistics.

Read on to find out everything that you need to know about RTO. It will help you to have more insight into the whole concept of eCommerce package delivery and logistics. 

What Is Return-to-Origin (RTO)?

Return to Origin or RTO is a commonly heard term in the eCommerce world. In simple terms, it refers to the non-deliverability of a package and its return to the seller’s address. The courier agency in the case of RTO, is not able to deliver the shipment due to the non-availability of the recipient and hence sends it back to the warehouse of the shipper.

The financial aspect is quite straightforward: RTO can lead to extra costs for your business. To maintain a healthy bottom line, it’s advisable to aim for a lower RTO rate. In summary, the lower the RTO, the better it is for your business.

What Are The Reasons Behind RTO?

There are various reasons why a package remains undelivered and is sent back to the seller. Some of them are as follows:

• The customer is not available to receive the package.
• The customer denies the delivery of the package.
• The address or other relevant information of the buyer is incorrect.
• The door/ premise/ office is closed.
• Failure in re-attempt for delivery

What Happens After An RTO Is Incurred?

The next obvious question that arises in your mind – is how is this RTO process carried forward?

In most cases, the package isn’t immediately returned to the seller’s original address. Once the order has been given a non-delivered status from the courier, the following course of action takes place:

• Most of the courier services re-attempt delivery of the order, at most 3 times.
• The courier/ seller calls the customer and asks for a favourable delivery time.
• Some of the couriers also send a text message or an IVR call to the customer, to know whether they would want to receive the parcel or decline it.
• If the customer is not reachable by either of the methods or declines the order, an RTO is generated.
• The order is then sent back to the seller’s registered address.

How Is An RTO Order Processed?

Return to Origin or RTO is classified into four categories depending on their nature.

• Reship immediately and expect a return.
• Reship immediately and don’t expect a return.
• Wait for return and reship.
• Wait for a return and cancel.

Usually, if the recipient is not available, the courier company will make some more attempts and try to call the recipient. If the recipient does not respond, the courier company marks the shipment as RTO and returns it to the shipper’s warehouse.

The entire return process depends on the contract between the shipper and the courier partner. There is also a shipping charge levied on RTO orders, which in most cases is borne by the seller. However, if you are using a logistics partner such as Shiprocket, these charges are reduced to a minimum.

Alternatively, you can also price your products in such a way that these shipping margins are incorporated.  You can know more about reducing your shipping costs here. The key to delivering your package smartly is to ship your package via a reliable courier partner and monitor your buyer behaviour closely.

4 Smart Method That Minimises RTO

1. Deliver orders on-time

To minimise RTO, it is important for sellers to deliver orders on time or as fast as possible. This is because delayed deliveries are one of the crucial reasons why customers refuse to accept their orders. 

Furthermore, fast delivery not only ensures low RTO rates but also plays a pivotal role in customer retention. Research suggests that 13% of customers never shop with the same retailer if their order isn’t delivered on time.

2. Confirm orders and verify addresses

Proactive steps can be taken to reduce RTO rates by addressing the common concerns that lead to order returns. This involves eliminating last-minute order cancellations and ensuring there is no room for errors such as incorrect addresses.

This step can easily be done with a smart RTO reduction tool, that lets you automate the order confirmation and address confirmation process with pre-configured notifications.

3. Keep customers in the loop

Prevent customer unavailability issues by providing continuous order updates at every stage of the delivery process. This can be accomplished through real-time tracking notifications sent via WhatsApp, SMS, and email. 

These updates not only keep customers informed but also minimize the frequency of “Where is my order?” inquiries, thereby contributing to cost savings in customer support.

4. Streamline your NDR management

Finally, harness the power of AI to enhance your delivery success rates. This includes automating notifications for undelivered packages and making reattempted deliveries at a time convenient for customers. This single step can lead to a significant reduction in your RTO rates.

Get Ready To Reduce Your RTO Rates 

Among the numerous strategies to lower your RTO rates, the four mentioned above are universally effective. If you’re looking to grasp the intricacies of eCommerce and aim to decrease your RTO issues, consider using Shiprocket’s intelligent RTO suite. 

This tool can potentially reduce your RTO rates by as much as 45%. By utilizing data-driven insights, it identifies high-risk RTO orders, streamlines buyer confirmations, and offers a comprehensive solution to boost your profitability.