1) What is RTO and How Does RTO Affect Business?
Ever since the ecommerce industry in India first took off, it has been plagued with RTOs. RTO, also known as Return to Origin, is the status given to orders that fail to be successfully delivered on multiple occasions. It essentially refers to those unfortunate situations where a delivery exception occurs (like a delay or a delivery failure) resulting in the order being shipped back to the origin warehouse.
These orders are considered cancelled orders in effect, even though they aren’t quite the same as cancellations. This basically means the value of the order paid or to be paid by the customer is nullified. At the same time, you’re still left holding the bill for the forward shipping costs, and potentially for reverse shipping charges too.
All things considered, you end up taking a hit with each RTO. To make matters worse, an overall high RTO% just looks plain bad for your company’s brand reputation. It signifies to competitors and customers that your maximum order fulfillment rate is, in fact, quite minimal.
The good news is RTOs do not have to mean the end of your business venture. Quite the opposite actually. You can approach RTOs with strategy and vigour to bring those numbers down, proving to the competition that you are a problem-solving kind of company and truly maximizing order fulfillment along the way.
2) How NDRs Affect RTOs
The leading cause of a high RTO% is failed deliveries, which are notified by courier partners as a NDR (Non-Delivery Report). An NDR is a notification informing your business that a delivery attempt has ended in failure. In some situations, a failed delivery attempt may directly be converted to RTO. Most carriers will perform 2-3 follow-up delivery attempts to ensure the order reaches successfully. In case multiple delivery attempts fail, the order is then switched to RTO status. In both cases, NDRs contribute heavily to a rising RTO%.
3) How to Reduce RTOs (%) in eCommerce Using NDR Management Follow Ups
By now you should have a clear understanding of the negative impact NDR and RTO can have on your business. The only way to ensure NDRs do not result in RTOs is through careful handling and a solid dose of that vigour-and-strategy combo we mentioned earlier.
Dealing with NDRs requires careful consideration and a defined workflow. This workflow should allow you to address NDRs independently in such a manner that there is scope for conversion of the NDR to a successful delivery and not an RTO. A basic system for NDR management follow-ups should ideally be carried out in accordance with the guidelines listed below.
3.1) Identify Various Causes For NDRs
There are numerous reasons why an NDR might occur (the most likely of which we’ve listed below). These causes for delivery failure can tell you what the next best course of action would be. It enables you to understand which NDRs have a high chance of success and which have a high chance of repeated failures. This way you can address NDRs based on their likelihood to be completed.
3.2) Empower Customers to Participate
There’s nothing customers hate more than being kept in the dark about their orders. Or being uninformed about them in any way at all. And who can blame them for that? They want to know their money has been well spent.
Based on the cause of an NDR, you should reach out to customers to confirm the cause of the NDR and, more importantly, collect information for successful delivery. Not only do customers get to directly provide the information needed, they also get to feel like a part of the delivery process which can make the experience more pleasant.
3.3) Keep Track of Fake Deliveries
Fake deliveries are a type of NDR that occur when delivery agents do not actually try to deliver the order but simply claim to have done so by marking the order as an NDR. These are extremely detrimental to profitability, as they have a high probability of resulting in RTOs, but also to customer experience.
Customers end up waiting on an order that doesn’t come and having to deal with multiple delivery attempts through no fault of their own. Tracking fake deliveries with different carriers can help you ensure this number is kept to a minimum.
3.4) Communicate With Carriers
When it comes to NDRs, a partnered effort is required to ensure the delivery is completed successfully. The carriers must first provide you with the notification of the NDRs. After you receive the right information from the customer for delivery, that information must then be passed on to the carrier. Any kind of indirect communication with carriers or inefficient forms of communication being used could lead to the next delivery attempt also being a failure.
3.5) Employ an NDR Management Software
The above 4 steps are absolutely essential for basic management of NDRs to reduce RTO%. However, to truly make a dent in your RTO% as well as your NDR numbers, you have to make use of more advanced and technologically supported resources. On the top of that list are NDR management software. They provide you with the tools you need to streamline the process of NDR management through automation and carry out multiple follow ups in a quick manner.
4) List of Top 5+ Possible Reasons Behind Non-Delivery of the Package or Order
The reason behind an NDR can tell you a great deal about why the delivery failed and, more importantly, whether or not it can be completed successfully. While there are a few no-hope cases of NDRs turning into RTOs, there are a great deal more NDRs that can be fulfilled. However, to truly make a dent in your RTO numbers correlating to NDRs, you need to be aware of all the different reasons an NDR might occur because of.
These causes inform you what your next step will be and play a huge role in mapping out how you need to communicate with customers. This is because the best way to solve an NDR is by approaching the customer for a solution, simultaneously making them a part of the process and keeping them informed so there are few customer complaints. Accordingly, these are the most common identifiable reasons behind NDRs.
4.1) Customer Rejection
Customers enjoy the freedom that comes with the convenience of online shopping. An unfortunate result of that freedom that ecommerce businesses have to face is that a customer can change their mind. Customers may reject the order and simply refuse to take possession of the delivery.
4.2) Customer Unavailable
Situations may arise where a customer may be unreachable or unable to collect the order from the delivery agent. In these situations, the delivery agent would not be able to deliver the order and therefore marks the same as an NDR.
4.3) Customer Rescheduled
In certain situations where the customer is unavailable to collect the delivery, the delivery agent may still be able to reach the customer. The customer can then offer an alternate date and time for the delivery to be successfully completed.
4.4) Wrong Customer Address
At the time of submitting the delivery destination, the customer may make an error in their inputted address. Alternatively, they might end up accidentally submitting an incomplete delivery address. The result is that the delivery agent will not be able to find the customer’s address and therefore be unable to deliver the order on the first attempt.
4.5) Wrong Customer Phone Number
Much like how a customer may make a mistake while entering their address, they may also make a mistake while entering their contact number. So if and when a delivery agent is unable to find the exact location of a customer, they will also be unable to reach the customer to request specific landmarks to locate it.
4.6) Fake Delivery
Once in a while, a delivery agent may not want to make a delivery. So they will simply mark a delivery as failed despite not making an actual delivery attempt. These are designated as NDRs caused by fake deliveries and can be extremely detrimental to customer experience.
4.7) Out of Delivery Area
Most carriers have a specific range of pin codes that they service. And when a delivery agent is assigned to carry out last-mile delivery, they are given a designated range within which they can deliver. An error in the address or computing the address may have resulted in the delivery destination being included within a delivery range that it is not a part of. This can lead to an NDR.
5) How NDR Management System Help Reduce RTOs Through NDR Follow Ups in eCommerce
Time is one of the most important elements in ensuring NDRs do not convert into RTOs. Our research has shown that the maximum time a customer will wait for their order to be successfully delivered after a failed delivery is notified is 36 hours. So from the time an NDR is notified, you have 36 hours to ensure one of the next delivery attempts is successful.
You would accordingly need a systematic approach that minimises the amount of manual effort and data inaccuracies involved. This is where NDR management software systems swoop into the picture with an arsenal of resources that give your basic NDR management workflow a Flash-level boost. With the help of specially and purposefully designed technological advancements, NDR management systems leave you with the following benefits.
5.1) Quick NDR Response Time
Again emphasising the importance of time management in converting NDRs, a good software management system allows you to receive NDR notifications in real-time. This means your NDR workflow springs into action as soon as an NDR is notified to the carrier by the delivery agent.
5.2) AI-Supported Allocation of NDRs
As soon as the NDR notification reaches you, an AI-driven engine immediately processes the information submitted about the NDR. Accordingly, the engine then classifies the NDR based on its cause which will inform the next step in the process to be carried out.
5.3) Automate Sending Customers Queries
Once an NDR has been categorised and segregated based on its cause, it is also identified as one that has a high likelihood of being converted into a successful delivery through customer intervention. Accordingly, based on the cause, an issue-specific query is automatically sent to customers.
5.4) Workflow to Drive Customer Responses
This distinction of NDRs based on cause is just one part of a much larger workflow that enables customers to participate in the delivery process. Reason-based queries and options will be created for each NDR cause, making it easy for customers to respond quickly and effectively. For example, in case an address issue is the cause, the customer is sent an automatic message enabling them to enter the correct address or a landmark to locate the address.
5.5) Automate Carrier Communications
Now that the information has been received from the customer that lets you know the best way to solve the delivery problem, that information needs to go to your carriers. This process is also automated by an NDR management software, ensuring that customer responses to the issue-specific queries are immediately pushed to carriers and their delivery agents. This helps avoid unnecessary delays.
5.6) Detection of Fake Deliveries With AI
AI not only helps with identifying NDRs but also with classifying them and addressing specific issues. Since fake deliveries can have such a negative impact on profitability and customer experience, fake deliveries need to be tracked with even more vigilance. With the help of AI, fake deliveries can be detected on a regular basis and then reduced through targeted and analytical strikes.
5.7) Improve Through NDR Analytics
Speaking of targeted and analytical strikes, fake deliveries may not be the only oddity or difficulty that you encounter when dealing with failed deliveries. There could be other important parts of your NDR process that have to be understood. There may be additional causes behind NDRs that are unique to your industry or a particular carrier performance that is ineffective. Data Analytics conducted by an NDR management software can help you determine these oddities and more.
Addressing NDRs one by one is a time-consuming process. In fact, everything about traditional or basic NDR management is slow and has limited effectiveness. Of course, any kind of form of NDR management is better than simply allowing your RTO numbers to go up. But at some point, you need to address the problem on a larger scale and ensure every NDR is dealt with in a quick and efficient manner.
That’s when you need to employ an NDR management software. It takes the very same unsupported system of NDR addressal that you were relying on before and Red-Bulls it (i.e, gives it wings). With a more effective system in place that automates the process of dealing with NDRs on a real-time basis, you can focus on more important things. Like weeding out delivery exceptions in your supply chain, and growing the business on all levels.