How do NDR and RTO Impact the Profitability of your eCommerce Business?
Do you know the two most important aspects that can be a major problem for your online business? Yes, you guessed that right – it’s NDR and RTO. Before we jump over to wondering how do these two concepts affect your business’ profitability, let us understand what these technical terms, NDR and RTO exactly mean.
NDR stands for Non-Delivery Report, which is a common term used in the industry for an unsuccessful delivery attempt generated by the courier partner. If a seller doesn’t take any effective action on a non-delivery report, it decreases the chance for further success and consequently, increases the share of return delivery or Return to Origin.
Mentioned below are few of the most common reasons for NDR shipments –
- Customer not Contactable;
- Address Incomplete/Incorrect;
- Customer Requested Future Delivery;
- Pay on Delivery amount not ready;
- Customer refused the delivery and a few more
At the same time, you must be wondering what does RTO mean? When the courier executive is not able to effectually deliver your order to the customer, your shipment automatically comes under RTO (Return to Origin). This entails that your product has now become an order to return to its original pickup location. And the reasons for return orders are pretty much the same as the reasons for NDR.
Let us understand a few ways in which these 2 issues have a way of impacting your internet business –
- Cash on Delivery Orders
COD deliveries are important. They help the seller to get cash out of the customer’s pocket in times of their apparent mistrust toward online payment methods. The Indian consumer is yet to put their complete trust in the online payment methods and that shows considering that roughly 70% of the Indian eCommerce transactions are in cash. In today’s Indian eCommerce scenario, COD shipping in Tier 1 and 2 cities is propelling the growth of the industry. RTO happens mostly when it comes to cash on delivery orders.
Imagine if a majority of these COD orders are returned to the origin. 40% of the orders are usually returned, which means that 1 out of 3 orders are sent out to be returned. The seller loses out on major business in this case, because they lock their inventory, pay forward and return charges, at the same time facing cash flow problems, as well.
- Inefficient Last-Mile Deliveries
India is new to selling digitally. Therefore, a lot of these sellers experience inefficiencies on the part of the delivery partner (courier partner). Some logistics companies are not equipped to handle digital sales, consequently ending up the order in states of NDR and RTO. Therefore, it becomes important for the seller to ensure that their business is partnered with a 3pl logistics company that is well-equipped to handle COD and prepaid orders.
- Damage to the Shipments
Inefficiencies in the services of a logistics company can be detrimental to your online business. In fact, a lot of sellers claim that these courier partners show a serious lack of empathy when delivering the shipments from one place to another. A lot of times, the sellers claim that their products reach the buyers in a damaged condition.
Once again, the solution to this problem is to reduce NDR and RTO by ensuring that you have partnered with the right 3pl logistics brand that ensures proactive communication and maintains safety standards whilst making deliveries.
- Lack of Transparency
Anything in the world could go out of control due to a lack of transparency between 2 parties, and the issues of NDR and RTO are not alienated to this philosophy. It is important for the seller to constantly keep track of their shipments so that they can take charge of the situation in case something goes wrong.
Team Shiprocket Social’s advice for you is to get in an alliance with the kind of third party logistics company that fortifies you with a real-time delivery tracking system. The more you know about your shipments, the lesser the chances are for your orders to go into NDR and RTO.
- Lack of Redressal
Any business, whether in the online world or a brick and mortar one needs proper redressal of their grievances. And it becomes a disappointment when the courier companies can’t provide the same. You order being stuck in RTO and NDR is an issue that needs a dedicated chat support team. Amazing, on-their-toes customer service will help you become in charge of your own business and your own shipments, at the same time making sure that the losses are to the minimum.
Final words? Well, Team Shiprocket Social doesn’t want your business to go through a state of unprofitability. Our aim is to equip you with the best resources and logistics services that help you grow your business. So what are you waiting for? Now that you know what devils NDR and RTO can be, don’t you think it’s time to get in touch with the perfect logistics partner so that you can start shipping products to your customers in the most efficient way possible?
It’s time to ship that parcel and increase your business’ profitability. It’s time to make social selling easy.