5 Ways to Reduce RTO for Ecommerce Business
eCommerce as an industry is centred around the customer. Whether it is pining for a customer’s attention against a sea of competitors, trying to convert that interest into a sale and providing the best after-sales experience to them.
eCommerce businesses rely on customers to buy their products to be able to generate revenue to offset the research and development, marketing, operational and logistics costs that they incur.
Retailers need to keep all these costs in mind while calculating how their products need to be priced so that they can be left with a decent profit margin.
However, there are many unforeseen circumstances that can eat into the profit margins, with return to origin (RTO) requests by customers being the most significant.
We take a deeper dive into what RTO charges and are and how businesses can reduce RTO expenses to maintain their profitability.
What is Return to Origin or RTO?
Return to origin or RTO is a term used for a situation where a customer returns a product after it has already been delivered. RTOs can occur for a variety of reasons, some of which are listed below:
- They received a defective product
- The product did not meet their expectations
- The product is different to what they saw on the listing
- They had buyers’ remorse
- They found a better deal elsewhere
RTOs can sometimes be due to instances such as goods being damaged in transit or incorrect items being packed at the warehouse for which sellers may need to take some of the blame.
However, the vast majority of RTOs occur due to factors that are not within the control of retailers and they need to do their best to find the sweet spot in their returns management process where customers are satisfied with the resolution and the business doesn’t incur a large number of expenses.
RTOs, if not managed properly, can have a dire impact on the bottom line of a business because the logistical process twice, once when it is delivered and once when the returned item has to be sent back to the warehouse and this can double the cost, all while no revenue is being generated from the entire transaction.
5 Best Ways to Reduce RTO Requests for eCommerce Retailers
Provide Ultra-Fast Shipping
Customers these days are conditioned towards instant gratification in terms of online shopping. Companies often try to out-compete each other in shipping speeds and this leads to companies that haven’t jumped on the bandwagon falling behind.
Offering ultra-fast shipping can reduce RTO frequency by delivering the goods to customers before they can change their minds.
Another benefit is that it can lead to positive feedback through reviews and online forums, which will help businesses attract more customers.
Provide Multiple Payment Methods
In the current day and age, retailers who do not offer every form of payment imaginable are destined to create an inconvenience to some customers that only use certain forms of payment due to personal preferences.
Providing multiple payment methods can reduce RTO requests by troubleshooting occurrences such as a COD order where a delivery partner does not have change but the transaction can be completed through UPI instead.
If the delivery partner did not have this facility, chances are that the customer could initiate an RTO, rather than rummaging around for change, which can cause delays and be an inconvenience.
Offer Order Tracking Facilities
Order tracking facilities are likely to reduce RTOs by giving customers real-time updates about the status of their order and where it is in the fulfillment cycle.
This keeps customers satisfied with the fact that the order is on the way and even if an issue occurs, they will be informed about it in a transparent manner and can be assured that it is being taken care of by adjusting the delivery time or date accordingly.
Customers get the most agitated when they are kept in the dark about the status of their order so it pays dividends to keep them informed.
Offer Exchange Options When an RTO is Initiated
Offering exchanges instead of returns can reduce RTO frequency immensely. It turns a situation where a retailer does not earn any money from a potential sale and instead has to pay twice the logistics costs, into a situation where not only does the retailer get a confirmed sale, but they can often receive a high revenue if the buyer wants something more expensive.
Customers will also be happy because they are getting an option to pick something that is more suited to their taste.
Provide Appropriate Product Descriptions
RTOs often take place due to the opinion of customers that there was a disparity between the details of the product that were mentioned in the listing and what they actually received.
To reduce RTO requests, retailers need to provide the most accurate depiction of a product, even if it may not be as flashy as they anticipated.
This will assist in adjusting expectations that customers have about a product and bring it closer to the real-world usage of a product.
RTOs can have an adverse effect on businesses if they are not contained or strategically managed. It is in a business’s best interest to reduce RTO, even though it is often inevitable that they will occur.
In that case, tactics can be employed to limit the damage that they can cause. If businesses need a way to reduce RTO frequency and manage them, they can opt to partner with WareIQ.
WareIQ is one of India’s leading eCommerce fulfillment companies that tackle RTOs through their custom RTO Shield, that limits the damage caused to retailers by providing insurance against them and transferring the burden away from sellers.
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