Strategies for Reducing Return to Origin in COD Orders

Return to origin (RTO) is a major challenge in the eCommerce industry. It leads to financial losses, operational inefficiencies, and even reputational damage. RTO is the highest in the case of Cash-on-Delivery orders (COD). 30% of COD orders end up in return placements.  

Are you worried about your RTO management? Read this blog to understand the causes of RTO and discover how it affects eCommerce business operations and overall order management. Learn how to develop practical approaches to reduce COD RTOs and enhance your business performance.

Decoding Return to Origin (RTO)

RTO can happen when a customer opts for Cash on Delivery but refuses to accept the product during delivery. The buyer may decline acceptance due to a wrong product, damaged item, or change of mind after placing the order. Every single RTO is a cost to the organisation. It also affects the supply chain and reduces customer satisfaction.

The Biggest Challenges of RTO for eCommerce Brands: Cost and Impacts

1. Financial Losses: 

The companies incur additional costs such as transporting the returned products, restocking charges and loss of revenue due to products and services that are sold but not used. Such costs reduce the organisation’s profit and can impact its financial strength. 

2. Damaged Reputation: 

A high rate of RTOs can severely damage a brand’s reputation and diminish customer trust. Buyers can share negative reviews on your website and social media platforms. Such exposure may harm your brand image. 

3. Operational Inefficiencies: 

The management of RTOs brings in operational distortions, interrupts business routines, and stresses resources. Such inefficiencies impact order delivery time, higher staff workload, and an overall decrease in organisational performance.

4. Increased Customer Service Workload: 

Customer service receives queries, complaints and requests for RTOs. With an increased workload, the response times to customers’ enquiries are slower. It may also impact the quality of the customer service.

5. Inventory Management Challenges:

High levels of RTO can be challenging for optimum inventory control. Also, when retailers undertake RTOs frequently, the inventory keeps increasing and requires more resources for storage. Moreover, returned products are sometimes in bad condition and can lead to a loss of sales or extra expenses for product reconditioning.

Why Do Consumers Return Items?

As fledging eCommerce ventures attempt to reduce RTO rates and optimise Cash-on-delivery (COD), it is vital to comprehend why consumers return items. When decision-makers identify overall causes of return, they can ensure a better customer experience. Now let us consider the most common causes of product returns and respective recommendations to deal with these problems.

Incorrect Product Information: 

Consumers may base their purchasing decisions on false information, which can result in a high percentage of returns. Buyers are more likely to reject products that do not match their expectations due to poor-quality images, unclear descriptions, or inaccurate sizing information. 

Recommendation: Businesses must provide adequate product information to prevent this issue. This information must contain thorough product specifications, high-quality photos, and full descriptions to guarantee that customers do not have unrealistic product expectations.

Poor Product Quality: 

Customers are more inclined to return a purchase if they receive sub-standard products

Recommendation: One way to tackle this issue is by ensuring strict quality checks for manufacturing and product delivery. You may include customer reviews and ratings on your site, and potential clients might know what to expect from your products. It reduces the likelihood of returns.

High Shipping Costs: 

The high shipping cost may extend the product cost beyond the customer’s expectations and make them change their mind when it arrives. 

Recommendation: To address this issue, you must inform shipping fees with the product price. You can offer reasonable or free shipping for a specific minimum order value. 

Delayed Deliveries:

Delivery capability is the most crucial aspect of customer satisfaction. When timely delivery is compromised, the confidence in the seller gets easily eroded. 

Recommendation: An effective tracking system can help keep customers informed. Quick, reliable and efficient delivery will help to meet customers’ needs and reduce COD RTOs.

Strategies to Minimise RTO Rates

Reducing RTO rates is extremely important for increasing effectiveness and gaining better returns on investments made in eCommerce businesses. You can reduce COD RTOs by following the key strategies effectively:

1. Verify Customer Information:  Ensure Accuracy and Avoid Errors

Having accurate customer information is critical to avoid returns. You can adopt some measures like address verifications and confirmation of contacts. By maintaining an updated address database, you can improve the reliability of the fulfillment process. You can optimise this process with several tools to assist with address validation and real-time verification and avoid errors.

2. Provide Clear Product Descriptions: Help Customers Make Informed Choices

There is nothing as damaging as putting wrong expectations on clients. Detailed descriptions help in minimising the chances of product returns. Include high-resolution images, complete descriptions and specifications. High-quality descriptions assist customers in making sound decisions. In addition, having customers’ reviews and ratings can also provide valuable data to determine product quality and performance.

3. Offer Multiple Payment Options:  Cater to Diverse Preferences

Offering more options for payment makes the delivery flexible. You can avoid COD returns by providing secure and easy payment methods such as credit/debit cards, digital wallets, and bank transfers. It is also important to emphasise the advantages of prepayment. For instance, faster processing of transactions and minimal incidences of fraud-related acts can motivate customers to shift to prepayment.

4. Optimise Shipping Processes: Deliver Orders Swiftly and Efficiently

Efficient shipping procedures are the most effective ways to enhance the delivery time and the general costs. Invest in the best shipping and tracking procedures for timely deliveries and improve your brand image. Finding optimal routes and real-time shipment tracking are effective shipping strategies to lower COD RTO rates.

5. Offer Easy Returns:  Hassle-Free Returns for Customer Satisfaction

A simple and trouble-free returns policy is a powerful tool to enhance customers’ confidence and trust. Clearly state your returns policy. It allows customers to purchase your products confidently. 

Ways to Optimise COD Orders 

COD order management is vital for the efficient performance of eCommerce operations since it enables the reduction of the RTO rate before order fulfillment. 

Here are some effective methods to optimise COD orders:

1. Risk Assessment: 

Data analytics is one of the most effective means of recognising customers with RTO tendencies. Comparing historical data and customer behaviours can help identify risks and take appropriate measures to minimise them. 

For instance, you can determine whether customers consistently return items from a given area or which customers occasionally reject the merchandise. With the help of appropriate tactics, you can alter the delivery procedures or request additional inspections for orders.

2. Proactive Communication: 

By communicating with the customers to confirm whether they are ready to accept the package and address any issue they may have, you can target customers who are willing to take the products. Incorrect address provided at the time of ordering or any change in delivery preferences can be easily discussed and solved before the delivery. It increases the chances of delivering the goods and the customer satisfaction.

3. SMS and Email Reminders: 

You can send automated message notifications by email or Short Messaging Service (SMS). These notifications can tell the buyer about the delivery date and time. It significantly reduces the likelihood of product returns due to the unavailability of customers. 

How to Encourage Consumers to Switch from COD to Prepay?

Indeed, transforming customers from cash-on-delivery (COD) to prepaid modes of payment can significantly improve your eCommerce efficiency and help reduce high COD RTOs ratios. 

Here are some effective strategies to encourage consumers to make this transition:

1. Offer Discounts or Promotions: 

You can offer special discounts or coupons for advance payment. It is one of the promising persuading factors which can draw the customer’s attention to this payment method. 

For example, you may reduce a certain percentage of the total purchase price or free shipping on any prepaid order. These financial benefits make the prepayment attractive as compared to COD. 

2. Highlight the Benefits of Prepaid Orders:

Communicate the advantages of prepaying to win over customers. Conversely, emphasise the positive aspects, such as accelerated order fulfillment, prioritising orders, and reducing fraudulent activity. Since prepaid orders are typically processed more quickly, this can help the delivery cycle proceed swiftly. Additionally, prepayment can safeguard against fraudulent transactions and payment rejection for the mutual benefit of both parties.

3. Create a Sense of Urgency: FOMO!

Use strategies and approaches to make the customer opt for prepaid instead of COD. Offer limited-time sales only for prepaid orders to create a sense of urgency and excitement. Provide special and attractive discounts, coupons or gifts to all clients who pay in advance for a specific time. It can reduce COD reliability, reduce RTOs, and enhance prepayment transactions.

Smart Communication Solutions: Maximise Conversions and Reduce RTO with Shiprocket Engage 360

Communication is one of the most crucial factors for the efficiency of COD orders and the reduction of RTO ratios. Shiprocket Engage 360 offers advanced communication tools to enhance customers’ experience and reduce COD RTOs. 

Here’s how Shiprocket Engage 360 can revolutionise your approach to handling COD orders:

1. Send Automated SMS and Email Notifications: 

Shiprocket Engage 360 assists businesses in delivering automated SMS and emails at appropriate times to the customer about their orders and delivery. Real-time updates can reduce the chances of customers declining deliveries as they are informed in advance. Automated communication promotes periodic customer feedback and makes the shopping experience more enjoyable.

2. Personalise Communication: 

Shiprocket Engage 360 offers a personal messaging system to know the customer’s history and preferences. You can optimise customer relations and enhance brand image. Thus, such individualisation of addressed subjects within the context of the post-purchase communication should be a way to increase satisfaction and customer loyalty and decrease returns.

3. Track Delivery Status: 

It is vital to check on the status of shipments to actively manage the customer’s expectations and decrease the RTO percentage. It includes real-time updates of the delivery status to help businesses keep their clients updated on the location of the orders. 

4. Gather Customer Feedback: 

Analysis of customer feedback data is a critical process for organisational improvement. Through Shiprocket Engage 360, customers can provide valuable feedback concerning the delivery and their experience. This helps investigate business areas that need extra focus and attention. It helps businesses reduce COD RTOs by meeting customer expectations and increasing the quality of services.

Conclusion

RTOs have a great potential to influence eCommerce companies’ financial and operating performance. You can consider applying these techniques to minimise the COD RTO rates, generate customer loyalty and increase operational efficiency.

Integrating intelligent communication solutions into your COD order fulfillment mix leads to a quicker order delivery process, enhanced customer satisfaction and lower RTO ratios. Shiprocket Engage 360 offers features that help engage the customers, update them and ensure they are satisfied at the end of the delivery process. 

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