What Is Return To Origin (RTO)?
Return to Origin (RTO) in ecommerce refers to a situation where a package cannot be delivered to the customer and is returned to the seller.
RTO is a significant issue for ecommerce businesses because it incurs forward and reverse shipping. Additionally, it can lead to delays in processing refunds or exchanges, negatively impacting customer satisfaction.
What Happens When A Package Gets RTO?
When a package gets RTO, it goes through the following process:
- Return To Seller: The package is returned to the seller’s warehouse or fulfilment centre. This involves additional shipping costs for the seller, often double the initial cost.
- Inspection & Processing: Once the package is received, the seller inspects it to assess its condition. If the product is undamaged and resalable, it may be restocked. However, if it’s damaged or the return period has expired, the seller might have to bear the loss.
- Customer Notification: The seller informs the customer about the RTO and initiates the refund process. This often involves deducting the shipping charges and any applicable restocking fees from the refund amount.
- Re-attempting Delivery: Some sellers might try to contact the customer to resolve the delivery issue and re-attempt delivery. However, this is usually done only if the customer proactively reaches out and agrees to provide accurate information or arrange a suitable delivery time.
Who Is Responsible For The Cost Of RTO?
In most cases, the seller is responsible for the cost of RTO. This includes the original shipping cost to the customer and the return shipping cost to the seller’s warehouse. However, there are some exceptions where the customer might be responsible for the RTO cost:
- Customer Error: If the RTO occurs due to the customer providing an incorrect or incomplete address, refusing to accept the package without a valid reason, or not being available for delivery after multiple attempts, the seller might deduct the shipping charges from the refund or charge the customer separately.
- Cash On Delivery (COD) Orders: In some cases, for COD orders, the customer might be required to pay the return shipping cost if they refuse to accept the package.
The specific policies regarding RTO costs can vary depending on the seller, the ecommerce platform, and the terms and conditions agreed upon during the purchase. The following is a breakdown of who usually bears the cost in different RTO scenarios:
| Scenario | Responsible Party | Explanation |
| Undeliverable due to incorrect address | Customer | The customer provided the wrong information, leading to the failed delivery. |
| Multiple failed delivery attempts | Seller | The customer wasn’t available or didn’t respond to delivery notifications. |
| Damaged product | Seller | The product was damaged during transit, and the customer refused to accept it. |
| Customer changed mind | Customer | The customer decided they no longer wanted the product after it was shipped. |
| Fraudulent order | Seller | The order was placed with fraudulent intent, and the customer never intended to receive it. |
What Are The Common Reasons For RTO?
The common reasons for RTO can be broadly categorised into customer-related, seller-related, and logistical issues:
Customer-Related Reasons:
- Incorrect Or Incomplete Address: This is the most common reason for RTO. Customers might enter incorrect house numbers, street names, or postal codes, making it impossible for the courier to locate the delivery address.
- Customer Unavailable: If the customer is unavailable at the given address during multiple delivery attempts, the package might be returned. This is especially common in cases where customers don’t provide a phone number or respond to delivery notifications.
- Refusal To Accept: Customers might refuse to accept the package due to various reasons, such as change of mind, damage to the product, or dissatisfaction with the product’s quality.
- Fake Delivery Address: Some fraudulent customers intentionally provide fake addresses to avoid paying for the order.
Seller-Related Reasons:
- Product Mismatch: If the delivered product doesn’t match the description or image on the website, the customer might return it.
- Damaged Product: Products might get damaged during transit, leading to customer refusal and RTO.
- Delayed Delivery: If the delivery is significantly delayed beyond the promised timeline, customers might lose interest or find an alternative, resulting in RTO.
Logistical Reasons:
- Courier Issues: Sometimes courier companies might face difficulties delivering the package due to unforeseen circumstances.
- Incorrect Labelling: If the shipping label is incorrect or illegible, it can lead to misrouting of the package and eventual RTO.
What Are The Best Practices To Prevent RTO?
Preventing RTO is crucial for ecommerce businesses to maintain profitability and customer satisfaction. The following are some best practices to minimise RTO rates:
- Address Verification: Implement address verification tools during checkout to ensure customers enter accurate and complete addresses. This can be done using address auto-complete features or third-party address validation services.
- Flexible Delivery Options: Offer multiple delivery options to cater to different customer preferences. This could include allowing customers to choose a preferred delivery date and time slot, opting for pickup at a nearby store or locker, or providing the option to leave the package with a neighbour.
- Returns Management: Streamline the returns process to make it easy for customers to initiate returns or exchanges if needed. Offer prepaid return labels and clear instructions on how to return the product.
- Data Analysis: Analyse RTO data to identify patterns and root causes. This can help companies identify areas for improvement, such as specific pin codes with high RTO rates or product categories with frequent returns.
Are There Tools To Detect Potential RTO Orders?
Yes, there are several tools and technologies available in India that can help ecommerce businesses detect and prevent potential RTO orders:
Address Verification Software
- India Post Address Validation API: This API provided by India Post helps verify the accuracy and deliverability of addresses entered by customers during checkout. It checks for errors, inconsistencies, and missing information, reducing the risk of RTO due to incorrect addresses.
- SmartyStreets International Street API: This global address validation service also supports Indian addresses, providing real-time validation and correction suggestions to ensure accurate delivery information.
Risk Assessment Tools
- Razorpay Thirdwatch: This AI-powered fraud detection and prevention platform helps identify suspicious orders based on parameters like customer behaviour, order history, and IP address.
- Signifyd: This global ecommerce fraud protection solution also operates in India, providing real-time risk assessment for online transactions.
