Solving the RTO Challenge

Solving the RTO Challenge

Sayoni Sinha
Sayoni Sinha

January 26, 2022

If you have an online business, you know that just getting a new order does not necessarily mean a successful sale. The product has to be packaged properly and shipped to the right address. Most importantly, your customer should like it enough to not return it.

What is RTO?

RTO takes place when a placed order is returned by the customer  or is unable to be delivered, and shipped back to the merchant. The seller has to bear the extra costs for shipping the returned product back to the warehouse before it is repacked for another customer. The returns can be due to many reasons including:

  • Non-genuine buyers who have no intention of actually paying for their purchase
  • Buyers who refuse delivery instead of going through the return process. 
  • The customer is not available at the address mentioned. 
  • Incomplete or fake shipping address

In case of returns, the seller doesn’t get his product back immediately. After the first attempt of delivery by the logistics partner, the following course of action takes place:

  • The courier services will make two more delivery attempts by setting a preferred time and date with the customer.
  • Customers are asked via call or IVR whether they would want to receive the package or decline it. 
  • If the customer is unreachable or declines the order, an RTO is generated. 
  • The order is then sent back to the seller.

CODs and the rise of RTOs

When e-commerce businesses took flight in India a few years ago, the ease of shopping and payment was the reason they managed to expand beyond the metros. There’s no denying that cash on delivery (COD) orders made for the largest chunk of those orders. A report suggests that COD is as high as 50% in metros and 70% in non-metros. While the average eCommerce return rate for all orders is 20 percent, it jumps up to a whopping 40 percent for COD orders. So for every 10 COD orders, an average of 4 will be returned.

Source: Pixelmattic

The merchant, therefore, loses money with RTOs when:

  • The inventory is blocked due to products being stuck in transit
  • Additional shipping costs are applied
  • Undertaking quality checks and repackaging
  • There’s an increased probability of products getting damaged or broken in transit.

Unfortunately, there’s no way around it. Accepting returns is an essential process in order to retain your buyers. You know that customers prefer a flexible product returns policy. According to a report, 67% customers check for the return policy before placing an order. They feel more at ease when purchasing a product, knowing they have a chance to return it if it doesn’t match their expectations. It turns them into long-term customers and encourages brand loyalty.

Tackling Return Fraud

While a lax return policy works for bigger e-commerce players, smaller e-tailers have to bear the brunt when things go wrong, especially with the growing problem of return fraud. Return fraud typically occurs when a shopper misuses a product’s return policy leading to financial losses for the merchant. There are several types of return frauds:

  • When an item is different from what was sold.
  • A counterfeit item. 
  • Purchasing multiple items with the intent to return some or all. 
  • Returning used items that can no longer be sold.
  • Those who habitually return merchandise. 

There is little one can do by then except to flag the buyer. But with professional fraudsters, it’s pretty much a lost cause as it is difficult to keep a track of them. Making your return policy too strict could see you lose business. While a lax one would invite unscrupulous buyers to abuse it.

How Blaze Prevents RTOs

Blaze evaluates risk, approves or declines transactions to eliminate fraud

A good data enrichment tool for digital footprint analysis such as Blaze can spot the riskiest buyers before they damage your business with excessive returns. Blaze helps merchants sift through customers and preempt such frauds. 

It’s AI/ML-powered Return to Origin (RTO) and chargeback protection eases transactions for good users and introduces friction for risky users. It identifies abusers by accessing their past buying behaviour, successful deliveries, and instances of returns. It instantly evaluates risk, approves or declines transactions to eliminate fraud. 

Additionally, it comes with ‘100% RTO Protection’, a financial guarantee on RTO orders for trustworthy customers across Bureau’s Trust Network. Every transaction approved by the Blaze system, is underwritten for RTO loss by Bureau. 

Why Trust Blaze?

Verifies Shipping Addresses

Smart shipping decisions and delivery probability based on the completeness of the address.

Smart COD

A dynamic COD checkout option to detect risky users and boost prepaid conversions.

Unlocks Historical Buying Behavior

Identifies abusers using past buying behaviour, successful deliveries, and instances of returns.

Identifies Risky Users

Creates a risk profile of users based on user inputs, device attributes, and data from telcos.

RTO  Insurance

Instantly evaluates risk, approves or declines transactions to eliminate RTO. In the event of RTO losses, merchants may claim the loss from the insurance.. 

Grow your revenue with Blaze

Return To Origins (RTOs) is one of the most underrated issues in the e-commerce industry. It’s, therefore, no secret that lowering your RTO will elevate your business ROI and consistent steps towards reducing RTOs will yield returns in the longer run. By incorporating the right solutions, it is now possible to have an effective RTO prevention strategy. So, while your customers get a smooth checkout experience, you can breathe easy as we take care of your risks.

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