COD (Cash On Delivery) mode of payment is the most preferred method in India for online purchases. These COD orders are the major factor responsible for packages getting RTO in eCommerce (Return-to-Origin). Customers get relaxed after selecting COD as their payment option, they don’t get impulsive as they would for their pre-paid order. Less eagerness leads to less energy to receive the order.
If there occurs any difficulty, in-order delivery or the customer is not available to receive the order, they don’t bother much (as their money isn’t stuck), thereby taking advantage of either rejecting the order or refusing the payment. There exist multiple reasons why COD is the major preference of Indian consumers as compared globally, simultaneously involving increased chances of RTO in e-commerce.
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What is Return To Origin (RTO)?
Return To Origin (RTO) refers to the situation where the delivery of an order is unsuccessful, typically after several attempts, for various reasons. When an order is marked as RTO, it signifies that it is being returned to the seller or the warehouse from where it originated.
Understanding RTOs and the associated challenges is crucial in finding effective solutions to address them.
What is causing the shipment to return to the seller?
The challenge posed by RTO varies across countries, spanning from developed economies to emerging ones.
In countries such as the U.S., known for firm e-commerce infrastructure, the primary concerns for merchants revolve around maintaining customer loyalty and ensuring cybersecurity. With a predominant use of prepaid orders, the RTO percentage tends to be significantly lower.
In contrast, countries like India witness a higher likelihood of RTO due to the prevalent use of cash-on-delivery (COD) payment methods for online purchases. This payment mode introduces uncertainty for customers, leading to increased instances of orders not being received as expected.
Why are RTO Orders Difficult to Handle?
In the realm of e-commerce, the Cash On Delivery (COD) payment method reigns supreme as customers opt to settle their payments upon receiving their orders, mirroring the traditional brick-and-mortar store experience.
This payment flexibility grants customers the liberty to reject delivery or withhold payment upon receipt, resulting in a higher incidence of Return To Origin (RTO) cases. This trend is particularly pronounced among first-time online shoppers who harbor low confidence in the process, leading to Fear about product quality, delivery safety, and potential damages.
Despite their reservations, the allure of trying online shopping at least once often overrides their Doubt, especially when coupled with the security of COD, which shields them from potential monetary losses or fraud.
Furthermore, the limitations in last-mile delivery infrastructure across various Indian pin codes increase the challenges. Many Tier-3 and Tier-4 cities remain underserved by e-commerce brands and carriers, leading to delays, stuck shipments, failed deliveries, cancellations, and subsequent RTO instances.
What factors motivate consumers to return items?
Understanding your customers’ needs and preferences is paramount for any direct-to-consumer (D2C) e-commerce brand. It’s crucial to delve into why customers are returning their orders and why some orders result in Return to Origin (RTO) scenarios. Beyond just considering cash-on-delivery (COD) orders and their associated RTO rates, it’s essential to explore the various reasons why customers may refuse delivery or return their orders.
Before coming up with solutions, it’s imperative to focus on understanding the root causes behind these behaviors. This involves investigating why customers might be dissatisfied with their orders, leading them to return them to the manufacturer. By gaining insights into the reasons for returns and RTOs, businesses can tailor their strategies to address these issues effectively.
A Few Tips to Significantly Reduce RTO in eCommerce in 2024.
The eCommerce sector has seen exponential growth, particularly for direct-to-consumer (D2C) brands. However, the persistent challenge of increasing Return to Origin (RTO) rates poses a significant obstacle for these businesses. In light of this, let’s explore how Shipeasy can play a pivotal role in mitigating RTO percentages effectively.
This is how ShipeasyTech can assist D2C eCommerce brands in decreasing their RTO percentage in 2024.
1. Enhance Shipping Efficiency:
To fight the significant portion of return-to-origin (RTO) orders stemming from delayed deliveries, Direct-to-Consumer (D2C) brands must streamline their shipping processes. Expedited shipping ensures timely delivery, fostering customer satisfaction and reducing the likelihood of seeking alternatives.
2. Elevate Post-Purchase Engagement:
Deliver an exceptional post-purchase experience by staying connected with customers and offering prompt assistance whenever needed. Real-time notifications regarding order status updates—from transit to delivery—enable customers to stay informed and engaged. Additionally, proactive alerts regarding delivery delays or exceptions further enhance customer experience.
3. Reduce RTO Risks:
To reduce the risk associated with high RTO in eCommerce percentages, consider blacklisting customers who exhibit a pattern of Cash on Delivery (COD) orders resulting in refusal upon delivery. This proactive measure helps deter potential RTO incidents and promotes more reliable transactions.
4. Address Human Errors:
Recognize that human errors, such as incomplete or inaccurate address and contact details, are commonplace in online purchases. Implement flexible systems capable of identifying and flagging such errors. Rather than categorizing them as risky orders outright, engage customers to verify and rectify the information. Alternatively, offers the option to save addresses and details in customer profiles for seamless future transactions.
5. Verify COD orders via automatic IVR calls:
70% of e-commerce customers in India, UAE, and the Middle East opt for Cash on Delivery (COD) payments, making it a predominant choice. However, verifying COD orders efficiently is crucial for businesses.
Traditionally, businesses relied on email verification, which often resulted in delayed responses due to low open rates. Instead of exploring similar verification methods like SMS, businesses are now turning to Interactive Voice Response (IVR) for a faster and more effective solution.
IVR offers a swift, straightforward, and widely accessible approach to COD order verification. Particularly beneficial for large-scale operations, IVR minimizes manual intervention by automating repetitive tasks.
6. Conversion from cash on delivery (COD) to prepaid:
Converting Cash on Delivery (COD) orders to prepaid ones has become crucial in the area of online shopping, where customers often make impulsive purchases, even of unnecessary items, to return them later.
Recognizing the challenges faced by brands due to Return to Origin (RTO) orders with COD payments, ShipeasyTech offers a solution by assisting e-commerce companies in converting COD orders to prepaid before delivery. This service boasts a success rate of up to 15% reduction RTO in ecommerce.
ShipeasyTech’s COD to prepaid application allows you to engage with your customers effectively through notifications sent via WhatsApp and SMS, encouraging them to prepay for their orders. Additionally, last-minute discounts are offered to Encourage customers further.
7. Detection of risky orders:
Detecting fraudulent orders has become increasingly challenging for eCommerce websites due to the surge in digital transactions, resulting in significant financial losses. A considerable portion of customers engage in fraudulent behavior by either providing incorrect addresses or consistently refusing delivery, often to return items.
Recognizing this risk, ShipeasyTech offers assistance to eCommerce companies in reducing operational expenses associated with fulfilling fake orders through advanced fraud detection techniques. This proactive approach enables businesses to identify and prevent fraudulent transactions before fulfillment, potentially reducing costs by up to 30%.
8. Communication in real-time:
Effective post-purchase communication is crucial RTO in eCommerce, ensuring customers feel informed and satisfied. Nothing delights customers more than receiving real-time updates on their order status.
With ShipeasyTech, you not only keep your customers informed about the progress of their orders but also leverage the platform with the highest message opening rates.
The ShipeasyTech-Shipping Automation app enables you to send order notifications directly to your customers via WhatsApp. Additionally, it provides a convenient order lookup page link, allowing customers to access further details about their orders effortlessly.
How order lookup page can help?
The enhanced Order Lookup page provides customers with comprehensive functionalities beyond basic order tracking, empowering them to:
1. Prepay for their order, facilitating payment in advance for Cash on Delivery (COD) orders.
2. Cancel their order at their discretion.
3. Request a re-attempt for delivery, enabling them to ensure successful receipt of their order.
9. Automate the generation of non-delivery reports.
On numerous occasions, orders have failed to reach their delivery destinations due to either incorrect delivery information or customers not being present to receive their orders.
In such instances, the undelivered orders are returned to the sender (RTO) if delivery is not reattempted.
With ShipeasyTech’s fulfillment automation app, users can generate comprehensive non-delivery reports for all unsuccessful delivery attempts, providing insights into the reasons behind the failures.
The app also facilitates communication with customers to arrange re-delivery attempts for orders that were previously unsuccessful.
ShipeasyTech’s innovative approach has resulted in a significant reduction of up to 30% in RTO in eCommerce instances through the use of non-delivery reports and re-delivery attempts.
Optimizing Cash on Delivery (COD) orders before fulfillment.
The e-commerce landscape has experienced significant transformations, particularly in developing nations such as India, where Cash on Delivery (COD) remains the current payment method.
Businesses initially embraced COD to penetrate markets where digital payment infrastructure was underdeveloped. While this approach facilitated growth to some extent, it also brought about operational challenges and increased danger to fraud, resulting in a surge of Return to Origin (RTO) instances.
The mounting RTO rates have inflicted substantial financial losses on e-commerce enterprises. Consequently, there’s an urgent need for Direct-to-Consumer (D2C) brands to streamline COD orders, even if they cannot be eliminated.
Outlined below are several strategies for optimizing COD orders before the fulfillment process:
Customer History Analysis
In the area of eCommerce, a diverse array of customers exists, ranging from those who embrace digital transactions and prefer pre-paid methods to those who are more Undecided and opt for Cash on Delivery (COD).
Brands can with great care Examine closely customer purchase past events, especially noting instances where customers have previously selected COD but failed to accept delivery. In such cases, brands have the option to either blacklist these customers from COD payments or verify their intent before proceeding with fulfillment.
Making Use of over eight years of industry expertise and handling more than 8 million monthly orders, ShipeasyTech has significantly improved fraud detection for various Direct-to-Consumer (D2C) e-commerce brands, boasting an impressive accuracy rate of 85%.
Customer Contact and Address Verification
A considerable number of customers from Tier 3 & 4 cities typically opt for COD payment when making online purchases. Therefore, it is imperative to encourage them to accurately input their addresses, including nearby landmarks, during the order placement process.
To enhance order accuracy and minimize risks, brands can adopt address validation software akin to industry giants such as Amazon and Flipkart.
Identification of Risky Orders
Deploying sophisticated software capable of automatically highlighting potentially risky orders based on factors such as customer purchase history and incorrect addresses or pin codes is essential.
By promptly identifying order risks, brands can make informed decisions regarding order handling before proceeding with fulfillment and shipping processes.
Stay Transparent with Shipment Updates
It’s crucial to keep your customers informed about the status of their orders, whether they’re on schedule or facing delays. While delays can sometimes be expected, maintaining open communication with your customers is key. Encourage patience and assure them that their orders will arrive, even if it’s beyond the estimated delivery date.
Offer Prepaid Options for Cash on Delivery (COD)
Empower your customers by providing them with the flexibility to prepay for COD orders at any point before delivery. Offering prepaid options can significantly reduce the chances of failed deliveries, ultimately helping to lower the rate of returns to origin (RTO).
Utilizing Multiple Communication Channels
Utilize various communication channels such as SMS, email, and WhatsApp to keep your customers informed throughout their post-purchase journey. Whether it’s confirming their order, providing updates on its status, issuing refunds, or offering last-minute discounts, reach out through their preferred medium. With a high opening rate of 99%, WhatsApp notifications are particularly effective for engaging customers and driving conversions.
With over 8 years of industry experience since 2015, our strategies are backed by robust data analytics to ensure effective communication and customer satisfaction.
Conclusion
The predominant challenge encountered by e-commerce entrepreneurs in India revolves around cash-on-delivery (COD) orders, a concern echoed by over 90% of businesses.
While COD without a doubt contributes significantly to the success of e-commerce ventures in India, it also exposes them to subsequent financial losses.
Tips to Convert COD Orders to Prepay
The issue at hand prompts the question: how can this problem be effectively addressed? Specifically, how can the volume of COD (Cash on Delivery) orders be minimized?
The solution to the latter query has been previously deliberated upon. Here’s a refined proposal to tackle your predicament: transition COD orders into prepaid orders.
Now, let’s explore strategies to Encourage customers to opt for prepaid transactions instead of COD.
Boost customer incentives by providing complimentary gifts or additional discounts for prepaid orders.
By presenting a more enticing deal, customers can take hold of the advantages of opting for prepaid transactions. For instance, providing an additional 5% discount, a 5% cashback, or a coupon for 5% off their next purchase exclusively for prepayment can be highly appealing.
Enhance the value proposition by offering complimentary shipping.
Granting free shipping to customers who opt for prepaid orders not only boosts the majority of prepaid transactions but also instills an awareness among customers regarding the added expense associated with cash-on-delivery (COD) shipping methods.
Implement a minimum order value requirement for COD transactions.
By establishing a minimum order value, such as Rs.1000, for COD payments, brands can encourage customers to either opt for prepaid orders or forego shopping altogether. This strategy prompts customers to weigh the benefits of prepaid transactions against the limitations of COD.
Expand the range of payment choices to accommodate various customer preferences.
Ensure that all viable payment gateways, including Razorpay, Cashfree, credit cards, debit cards, UPI, and bank transfers, are readily available. This comprehensive approach ensures a seamless payment experience for customers, reducing any potential obstacles in the checkout process.