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.

5 Smart Methods to Reduce RTO in eCommerce

1. Deliver orders on time

To minimise RTO, it is important for sellers to deliver orders on time or as fast as possible. Delayed deliveries can increase the chances of customers refusing an order, cancelling it, or simply becoming unavailable when the shipment arrives.

Furthermore, faster delivery not only helps reduce RTO rates but also improves the overall customer experience and can encourage repeat purchases.

2. Confirm orders and verify addresses

Proactive verification can help reduce RTO by addressing common issues before an order is shipped. This includes confirming COD orders, validating customer details, and ensuring that the delivery address is accurate.

Sellers can use automated order confirmation and address verification tools to identify potential issues early and reduce the chances of an order failing because of incorrect or incomplete information.

3. Keep customers in the loop

Prevent customer unavailability issues by keeping buyers informed throughout the delivery journey. Sending timely updates through WhatsApp, SMS, or email helps customers know when their order has been shipped and when they can expect delivery.

Clear communication can also reduce uncertainty around the order and minimise unnecessary “Where is my order?” queries for customer support teams.

4. Streamline your NDR management

Not every failed delivery attempt needs to become an RTO. When an order is marked as undelivered, sellers should act quickly by communicating with the customer and initiating a reattempt where appropriate.

Automated NDR notifications, faster customer responses, and convenient reattempt scheduling can help recover orders that would otherwise move towards RTO.

5. Reduce RTO Risk Before Shipping with fastrr Checkout

A large part of RTO prevention starts before the order reaches the courier. fastrr Checkout by Shiprocket helps ecommerce businesses identify and manage potential RTO risks at checkout itself.

With features such as Partial COD controls, risk-based order management, and prepaid conversion nudges, sellers can take action on high-risk orders before they enter the delivery cycle. For example, businesses can restrict or partially disable COD based on factors such as pincode, order value, customer history, or address quality, while encouraging eligible customers to switch to prepaid payments.

This helps sellers tackle one of the key sources of RTO which is risky COD orders at the point where the customer places the order, rather than waiting until a shipment reaches the NDR stage.

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.