What is RTOs & NDRs in eCommerce
What is RTO and NDR in E-commerce?
With the dramatic rise in the fortunes of the E-commerce sector in India has come a range of problems which are unique to online businesses. Needless to say, these problems are present worldwide and are not limited to India alone. 2 of the major issues which have persistently plagued online businesses and their associated last mile delivery logistics backbone are NDRs and RTOs. Let’s take a look at what they are and why they are a major hazard.
Decoding the terms
In E-commerce, RTOs stand for ‘Return to Origin’ and NDRs mean ‘Non-Delivery Reports’. NDRs are filed by the courier partners of an online business once the first delivery attempt fails. Subsequently, a maximum of 3 separate attempts to complete the delivery are made. Should they fail as well, the courier partner will label that specific parcel or package for reverse shipment. That is, it will be earmarked for RTO.
These seemingly-simple logistics issues are also the stuff of nightmares for most online businesses. Too many non-delivered items will eat away at their profit margins and also cause significant customer churn. Concurrently, a disproportionate number of RTOs in a certain period will also mean that the seller has to pay its courier partners out of its own corpus despite its shipment not being delivered.
The double whammy is a leading cause of cost escalation. Modern and forward-looking E-tailers must take proactive steps and invest in NDR Management software solutions that automates the last-mile delivery process and attempts to prevent or minimize RTOs. Here, you will also learn in detail about what is NDR (Non delivery report) and RTO (return to origin) in eCommerce.
The impact of NDRs and RTOs on online businesses
Simply put, these aspects have a negative impact on online businesses. One undelivered parcel is a liability for the company.
To remain profitable and economically viable in an atmosphere of fierce competition, Online businesses must ensure that the number of non-deliveries come down. This can be achieved by understanding why NDRs are happening in the first place.
There are several reasons why items may remain undelivered. Shipments may have the wrong address, or perhaps an incomplete one. Often, the recipients cannot be contacted for varying reasons. Sometimes, the customer may flatly refuse to accept the delivery.
Another problem is with COD orders. Cash-on-Delivery modes of payments are extremely common in the smaller towns and cities. Since the parcel is not previously paid-for, there is every chance that the customer may not be able to pay for it when delivery is attempted. CODs are known for their many benefits, but this is one of its untold drawbacks.
Estimates from on-field agents highlight that around 40% of all COD orders are unfulfilled and may have to be returned back to the seller.
The point that online retailers need to understand here is that real-time updates on NDRs are extremely important. Once the courier partner has made the mandated 3 attempts, businesses do not have any option left but to ask for the parcel to be shipped back to its warehouse or hub.
The bottomline remains choosing a professional courier partner plus an NDR management software to boot. This will fetch NDR numbers in real-time and give businesses the chance to keep RTO figures down.
