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A Simple One-click Solution To
Reduce Cash on Delivery and RTO

Photo courtesy Andrea Piacquadio

In India, CoD (Cash on Delivery) is the primary mode of payment. About 72% of all orders are CoD and 40% of these orders get RTO’d (Return to Origin). When you, as a merchant, are trying to scale up your business, in an already competitive market, losses from RTO can make a huge difference to your bottom-line.

Distribution of payment methods and RTO rates in Indian Ecom (Source PixelMattic)

As the high speed and cheap internet penetrates the Indian landscape, we are expecting to see a surge of new buyers from tier II and III cities. With this rise in buyers and coupled with the fact that tier II and III cities see more RTOs, the rate of RTO is expected to rise even further.

Before we move ahead, let us quickly look at the root causes of RTOs.

When the delivery agent is unable to deliver a package, it is marked RTO.
As a result, the order is sent back to the seller’s warehouse.
Based on our internal study on over a million orders, we found that for SMBs, on an average 4–6 items need to be sold to compensate for 1 RTO order. Below are some of the most prominent reasons for RTOs:

  • Customer not available to receive the package
  • Incorrect address
  • Impulse buying
  • Change in price
  • Fraudulent intentions
  • Courier company negligence/error
  • Human error

Have a look at this brilliant post for more information on RTOs — All things RTO.

To design an effective solution, we at Logisy, had to understand every aspect of the problem along with how merchants run their businesses.

So, here’s how e-commerce companies have tried to solve the RTO problem

  • Incentivize — Provide offers and coupons to users who pay online.
  • Keep a Minimum Purchase Limit for availing COD — COD to be available only if users buy up to a minimum amount.
  • Charging for CoD — To discourage people from buying who are unsure about the purchase. However, serious buyers may also find this annoying.
  • Contact Info — Detect incorrect or incomplete addresses and update them. Add landmarks where possible and run basic sanity checks with a buyer’s contact number and email.
  • Fake Orders — Detect fake orders by identifying the buyer’s contact details. For instance, it could be a fake phone number, strange address, or even an email address.
    Certainly, the key here is to stay alert against fraud.
  • Disable CoD on-site — While this is a stop-gap solution, it does not solve the problem. Moreover, order volume reduces drastically when you disallow CoD orders. Thus, it decreases your turnover.

Now performing the above tasks is not manually possible. You, as a merchant typically do not have resources to scrutinize each order or to manually enable/disable CoD based on different situations and locations. This problem expands rapidly during a good season or when you want to scale your business up. That’s where we come in. Logisy reduces RTO by automating all the above-mentioned tasks and by providing even more. Our technology-driven approach, coupled with the latest machine learning algorithms provide powerful tools to both detect and prevent RTOs.

Photo courtesy Hitesh Choudhary

Logisy is a SaaS platform that can be installed as a plugin on your e-commerce store. It combines advanced data analytics with real-time scoring to detect and eliminate losses due to RTOs incurred by SMBs.

  • Order Quality Scoring
    Logisy calculates the probability of an RTO, which helps a merchant decide whether or not to process that order.
  • Detect Human Error
    Logisy runs sanity checks to identify human error in real-time.
  • Monitor Shipping Companies
    Logisy scores shipping companies based on their performances and suggests the best shipping company for an order.
  • Automated Non-Delivery Reports
    Logisy collects feedback from buyers via email, SMS and/or WhatsApp, upon delivery errors and lets you know about their perspective.
  • Enhance Website Traffic
    Target your ads to people similar to your most loyal customers, thus reducing RTO.
  • Convert COD Users to Paid Users
    Logisy increases paid orders by providing offers to buyers if they convert their CoD orders to paid, thus reducing the RTO rate.
  • Geo-analysis
    Logisy uses the latest machine learning algorithms to determine which cities work best for your store. It also provides you a platform to discover new markets.

Logisy will do all the hard work, and make sure each one of your order is authentic. In the next article, we will go in-depth on how Logisy solves the problem of RTO for you.

Have a query? Please reach out to us for a free consultation session on ways to reduce RTO and install Logisy to try out its efficacy for yourself.