What is RTO and its major contributors?

RTOs are basically a leak in the sale journey – when a customer has landed on your site, added to the cart, made a purchase and checked out but the sale still hasn’t happened due to reasons you can’t control, it can be frustrating. These RTOs can also prove to be a major hit to the bottom line in terms of wasted marketing and shipping costs.

Cash-on-delivery (COD) is a major cause for RTO – but unfortunately, India is a nation where brands cannot survive without offering COD. Many brands have experimented with turning off COD on their platform and failed with their orders dropping greatly.
However, the good news is that prepaid orders have increased as a result of all the digitization that has happened over the past few years. As a brand, you can also focus on these three major drivers to increase prepaid orders:

• Incentivizing for prepaid orders
• Focussing on repeat customers
• Optimizing customer support
  

RTO-reducing measures for brands starting out

Chetan talked about Snitch’s journey and how they overcame the impact of RTOs in the initial stages by following a “PCS” metric. PCS refers to payments, communication and shipping in the same order.
And, how does this work?

• Giving your customers all available options when it comes to payments. While UPI is a very popular method of payment, incentivize your customers to make that payment online.
• Keep your customers informed about their delivery but don’t bombard them with messages across platforms – choose your platforms wisely based on how your customers are engaging with them.
• Ensure that all your orders are shipped within 48 hours, else it will lead to a backlog of orders that will have a negative impact on customer experience.
  

Following these key steps will help reduce RTOs for sure – Snitch saw a difference of 20-25% in doing so.

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Incentivizing for prepaid vs charging for COD

Converting COD orders into prepaid requires changing a customer’s mindset – however, charging a customer for COD orders is not necessarily penalizing them but covering the costs of enabling customers to pay on delivery. On the other hand, when you give customers an incentive for paying online, you’re essentially averaging the costs on your end.

Building trust with customers

Spending time and effort on building a brand can go a long way in converting customers and reducing RTOs. Today’s customers will hear about a product and then hop onto Amazon or Myntra or other marketplaces because of its easy return policies and delivery guarantees. However, a good experience with your product with automatically bring them to your D2C site and you’ve earned them as a loyal customer.

On the other hand, customer experience is a major trust builder. If someone has experienced your website and has had a good experience, this will help build trust to a certain extent. One thing that has worked well for Snitch is micro-influencers over macro-influencers. Their customers were their brand ambassadors, and nothing instills more trust than customer advocacy.
Key Takeaways

• India is a market where brands cannot survive without offering COD
• If you’re an early-stage D2C brand, follow the PCS (Payment – Communication – Shipping) metric to reduce RTOs
• Incentivizing your customers for prepaid orders can help average out costs incurred for COD
• Building trust is key for any brand operating in the D2C space
• Make your customers your micro-influencers – nothing works better than when you have your customers advocate for your brand

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Wrapping up

We ended this session with a deeper dive into the more minute ways of reducing RTOs while Chetan and Devika took questions from the audience around AI tools to use to reduce RTOs as well as a discussion around where Indian D2C brands stand in comparison to global brands.
For more insights into Reducing RTOs for D2C brands, watch the webinar recording now!