{"id":1124,"date":"2019-08-29T06:25:00","date_gmt":"2019-08-29T06:25:00","guid":{"rendered":"https:\/\/printrove.com\/blog\/?p=1124"},"modified":"2020-11-02T16:13:54","modified_gmt":"2020-11-02T16:13:54","slug":"reduce-cash-on-delivery-and-rto-losses","status":"publish","type":"post","link":"https:\/\/printrove.com\/blog-2\/reduce-cash-on-delivery-and-rto-losses\/","title":{"rendered":"A Simple Hack to Reduce Cash on Delivery and RTO Losses"},"content":{"rendered":"Read Time:<\/span> 7<\/span> mins<\/span><\/span>\t\t
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Want to reduce losses on Cash on Delivery and RTO orders without disabling COD?
In this post, I shall discuss a simple key called Logisy to minimize your Cash on Delivery and RTO losses.<\/p>\n\n

Did you know that as high as 72% of Indians<\/strong> prefer Cash on Delivery as the payment option?<\/span><\/p>\n\n

\"72%\n
Source – PixelMattic<\/a><\/figcaption>\n<\/figure>\n\n

Heck, out of them, <\/span>40% <\/b>of the total Cash on Delivery (COD) orders are<\/span> returned.<\/b><\/p>\n\n

\"40%\n
Source – YourStory<\/a><\/figcaption>\n<\/figure>\n\n

Do you see a problem?\u00a0<\/span><\/p>\n\n

No doubt, COD has contributed toward the growth of e-commerce in India. Certainly, it boosted the order volumes.<\/span><\/p>\n\n

Besides, it is a huge hit among buyers. I love it too.<\/p>\n\n

Having said that, you may suffer from losses on Cash on Delivery orders resulting in RTO.<\/p>\n\n

Yet, you will kill your sales if you disable COD.<\/p>\n\n

So what do you do? <\/span><\/p>\n\n

Well, there’s more to it than what meets the eye.\u00a0Stick with me so we can analyze the problem and then make a wise decision for yourself.<\/span><\/p>\n\n

How do Cash on Delivery orders turn into losses becoming RTO?<\/b><\/h3>\n\n
\"How<\/figure>\n\n

The issue is not COD itself but the returns <\/em>that come along<\/span> with it.<\/p>\n\n

You see 1 out of every 3 orders are returned<\/strong> to the warehouses.\u00a0<\/span><\/p>\n\n

When they’re returned, they’re called Return to Origin (RTO)<\/span> in the e-commerce world.<\/p>\n\n

What is RTO and how does it work?<\/strong><\/h4>\n\n

When the courier agency is not able to deliver the package, it is marked RTO. <\/span>
As a result, the order is sent back to the seller\u2019s warehouse.<\/span><\/p>\n\n

This usually happens because of the following reasons:-<\/span><\/p>\n\n

a. Customer is not available to receive the package.

b. They deny receiving the package.

c. Address or other information of the buyer is Incorrect

d. Closed door\/ premise\/ office.<\/p>\n\n

If you want to learn more about RTO, read this post – All things RTO<\/a><\/p>\n\n

Impact of high RTOs on the e-commerce market<\/b><\/h5>\n\n
\"Impact<\/figure>\n\n

So how does it affect you as an e-commerce entrepreneur?<\/span><\/p>\n\n

Well, you have to bear forward and reverse logistics costs.\u00a0<\/span><\/p>\n\n

Forward Costs is the regular shipping fee charged to deliver your package. <\/span>It’s a loss for you because this order is not a sale anymore.<\/p>\n\n

In a sale, you can easily place the shipping burden on your buyer by including shipping in your products.<\/p>\n\n

Likewise, the Reverse is exactly what it says – <\/span><\/p>\n\n

\n
\"\"<\/figure>\n<\/div>\n\n

The cost of shipping back from the customer’s place to your warehouse.<\/span><\/p>\n\n

Worried? There\u2019s more.<\/span><\/p>\n\n

You may also lose a ton of money on operational costs for – <\/span><\/p>\n\n

1. Processing such order<\/span>s

2. Physical Quality Check <\/span>

3. Re-packaging of Returned items<\/span>

4. Damage caused to Fragile items<\/span> and,

5. Items lost or stuck in transit.\u00a0<\/p>\n\n

In case you dropship<\/a> it, your dropshipping supplier<\/a> will charge you for it. <\/span><\/p>\n\n

Let’s talk facts<\/strong><\/h6>\n\n

A fashion unicorn provided these stats to us for the month of May 2019 – <\/em><\/span><\/p>\n\n

Out of their 1.5 lac orders across all marketplaces, more than 25 thousand were marked RTO.<\/span><\/p>\n\n

This is worse<\/span>. On their website, out of 44 thousand orders they received, more than 23 thousand were marked RTO.<\/span><\/p>\n\n

\"More<\/figure>\n\n

As a result, more than 50%<\/strong> of their orders were returned to origin!<\/p>\n\n

Isn’t this problem more serious than you thought<\/span>?<\/p>\n\n

However, it’s not just you. Sadly, it’s affecting the entire e-commerce industry <\/a>in India.<\/p>\n\n

If you\u2019ve ever suffered Cash on Delivery losses due to RTO, you can relate to this brand here.<\/p>\n\n

Besides, if you\u2019re planning to start your online business<\/a>, do provide for these costs in your business startup checklist<\/a>.<\/p>\n\n

Cracking the Solution<\/strong><\/h3>\n\n
\"Cracking<\/figure>\n\n

We wanted to understand the root cause of this problem and its impact on the market<\/span>.<\/p>\n\n

So, we performed market-wide research.<\/span> This then gave us real data to support our solution.<\/span><\/p>\n\n

Without waiting, l<\/span>et’s dive right in into some of the findings –<\/p>\n\n

Understanding the source of the problem.\u00a0<\/b><\/h4>\n\n
\n

If you don\u2019t get to the root of the problem, it will continue to grow – Anthony Angelo<\/span><\/i><\/p>\n<\/blockquote>\n\n

To do that, we analyzed a bunch of RTO orders and found the following recurring patterns<\/span> –<\/p>\n\n

a. Orders placed without the real intent of buying<\/span>

b. Orders placed with missing or incomplete customer information (address error, PIN code error, etc.<\/span>)

c. Orders from transitory addresses (hotels, hostels, institutes, etc.)<\/span>

d. Orders by price-sensitive customers (they would reorder the moment they find a better deal elsewhere)<\/span>

e. Impulse buying (Knowing well that there’s no issue in refusing delivery)<\/span>

f. Fraud orders made by habitual fraudsters\u00a0<\/span>

g. Fraud by 3rd party promoters of the store (they benefit from conversions that come through them<\/span>)<\/p>\n\n

Here\u2019s how others have tried to solve it<\/b><\/h5>\n\n

Incentivize<\/strong> – That is to provide offers and coupons to users who pay online<\/strong><\/span>.<\/strong><\/p>\n\n

Keep a Minimum Purchase Limit for availing COD<\/strong> – COD will be valid only if users buy up to a minimum amount.<\/span><\/p>\n\n

Charge for COD –<\/strong> Buyers will then see COD as an extra baggage charge. As a result, people will start avoiding it soon.<\/span><\/p>\n\n

Contact Info <\/strong>– Fill correct and complete address with landmark while filling the buyer’s address. The same goes for his\/her contact number.<\/span><\/p>\n\n

Fake Orders<\/strong> – Detect fake orders by identifying the buyer’s contact details. <\/span><\/p>\n\n

For instance, it could be a fake phone number, strange address, or even an email address.<\/span>
Certainly, the key here is to stay alert against fraud.<\/span><\/p>\n\n

Disable COD on-site <\/strong>– While this is a stop-gap solution, it does not solve the problem.\u00a0<\/span><\/p>\n\n

Moreover,<\/span> order volume reduces drastically when you disallow COD orders. Thus, it decreases your turnover.<\/span><\/p>\n\n

Here\u2019s how we solved it<\/b><\/h5>\n\n

While the above points might be effective, we believe in a different approach.<\/span><\/p>\n\n

We understand you don\u2019t have the time and manpower to check every order for its authenticity.\u00a0<\/span><\/p>\n\n

Besides, if you\u2019re scaling your business, you can’t afford to give offers and discounts. It’s a competitive market.<\/span><\/p>\n\n

So we created a system that does this analysis and makes it automated.<\/p>\n\n

As a result, you can focus on scaling your business while we take care of the COD check.<\/p>\n\n

The Birth of Logisy:-<\/b><\/h4>\n\n
\"Machine<\/figure>\n\n

Using the data that we gathered from our research, we have come up with a <\/span>Machine Learning based solution – Logisy.<\/a><\/b><\/p>\n\n

It helps e-commerce stores weed out RTO prone orders.\u00a0<\/span><\/p>\n\n

What makes it so unique is that it’s an automated scalable <\/span>system.<\/p>\n\n

So when you’re expanding your business and getting a ton of orders, this will do the hard work of making sure they’re authentic for you.<\/p>\n\n

Besides, given the complex nature of the problem, it is perfect to handle it.<\/p>\n\n

How Logisy helps stores reduce Cash on Delivery and RTO Losses:- <\/b><\/h5>\n\n
\"\"<\/figure>\n\n

Logisy is a big data-powered platform. So with data, it helps you detect orders that have high RTO probability.<\/p>\n\n

And how does it do that?<\/span><\/p>\n\n

Think about this. A potential buyer comes to your website. After browsing, they place an order for a t-shirt they liked.<\/p>\n\n

This is what Logisy will do in the backend –<\/p>\n\n

It shall first collect 150+ parameters for that order.<\/p>\n\n

After that, it shall analyze it against historical data using machine learning algorithms.<\/p>\n\n

\n
\"\"<\/figure>\n<\/div>\n\n

But wait, what if they’re a fraud? How would I know that?<\/p>\n\n

Don’t worry, it’s got your back.<\/p>\n\n

It shall follow the fraudster through the footprints they leave behind. <\/span>It does this while ensuring they are anonymously tracked. <\/span><\/p>\n\n

\n
\"\"<\/figure>\n<\/div>\n\n

What if they come back?

They can’t because it prevents them from committing further fraud.<\/span><\/p>\n\n

Okay, what if they’re not a fraud but fill in the wrong address?<\/p>\n\n

It’s got you covered. It can draw conclusions from any unrelated data and give you the required result.<\/p>\n\n

\n
\"\"<\/figure>\n<\/div>\n\n

Can I know why it rejected their order?<\/p>\n\n

Of course, it will give you reasons for doing so. It can do this because it analyzes their browsing behavior on other websites and apps.<\/p>\n\n

Great, is there a way to be updated with all of this?<\/p>\n\n

Well, Logisy will present all this right next to your order. Have a look!<\/p>\n\n

\n
\"Logisy<\/figure>\n<\/div>\n\n

Now you can analyze orders and decide whether or not to process them. This is true power!<\/span><\/p>\n\n

Being scalable, it can be used by small as well as big e-commerce firms.\u00a0<\/span><\/p>\n\n

Some more facts<\/strong><\/h5>\n\n

Our e-commerce partners have already been using Logisy with a 60-80% reduction<\/strong> in their RTOs. <\/span><\/p>\n\n

Don’t believe it? Have a look at this graph below of a Fashion Brand named Calenvie<\/a><\/p>\n\n

\"Reduction\n
Reduction in RTO from 5k to less than 2.5k after Logisy<\/figcaption>\n<\/figure>\n\n

This number will continue to increase as we keep adding more features to the product.<\/span><\/p>\n\n

It’s mainly because our algorithm continues to learn from the data that gets fed into it over time.\u00a0<\/span><\/p>\n\n

Conclusion<\/strong><\/span><\/h6>\n\n

If you are an e-commerce store owner or belong to this industry, I’d love to hear your thoughts on the article. <\/span><\/p>\n\n

Are you seeing a high number of RTOs on your COD orders? How have you been dealing with it? Do feel free to comment below your experiences, ideas, and feedback.<\/em><\/span><\/p>\n\n

Lastly, if you’d like to explore how Logisy works, we welcome you to signup for our one-month- free trial<\/a> to enable fraud order detection on your e-commerce site. <\/span><\/p>\n\n

And if you’d like to talk to us or just want to say Hi, you can reach us <\/span>here<\/span><\/a>!<\/span><\/p>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

Read Time:<\/span> 7<\/span> mins<\/span><\/span>Want to reduce losses on Cash on Delivery and RTO orders without disabling COD?In this post, I shall discuss a simple key called Logisy to minimize your Cash on Delivery and RTO losses. Did you know that as high as 72% of Indians prefer Cash on Delivery as the payment option? Heck, out of them, […]<\/p>\n","protected":false},"author":4,"featured_media":1201,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":["post-1124","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-build"],"yoast_head":"\nA Simple Hack to Reduce Cash on Delivery and RTO Losses - Printrove<\/title>\n<meta name=\"description\" content=\"Want to reduce losses on Cash on Delivery and RTO orders without disabling COD? 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