Running an online store is like playing a game of chess. But instead of a chessboard, you’re moving pieces worldwide to fulfill customer orders. If those orders start coming back, it can mean checkmate for your bottom line. Knowing how to reduce RTO in ecommerce can help your business stay profitable.
What is an RTO Order?
Before reducing RTOs, you must know what an RTO in ecommerce is. RTO stands for return to origin. It’s when a customer returns an order to the warehouse, or it wasn’t delivered.
An RTO order can happen for many reasons. Maybe the customer didn’t like what they received. Or maybe there was no one there to accept the order, or the customer had it shipped to the wrong address. Whatever the reason, RTO orders can be costly for ecommerce companies.
Why RTO is a Nightmare for Ecommerce Businesses
RTO orders can be nightmares for your company. When a customer returns a product, ecommerce businesses often foot the bill for the return shipping. Businesses also have to track items stuck in transit. And, while the items are in transit, they can’t be restocked and sold to other customers.
Plus, there are many costs associated with restocking those orders. It takes staff to handle the returned orders and process them. Plus, employees must check the returned items to ensure they aren't damaged before restocking them.
Usually, customers pay for products upfront, and then you issue them a refund. But, if there is an RTO for a cash-on-delivery order, you're on the hook for the order cost, plus shipping and return shipping. Reducing RTO in ecommerce can help your business avoid these costs.
Why Should Brands Reduce RTO?
Reducing RTO can save your ecommerce business a lot of money in the long run. A significant amount of RTO orders are due to fraud. Some customers may accept the product they received, use it, and return it for a full refund. Other customers may order a new item and swap it with a broken version they already owned. Then, they’ll return the broken item, effectively getting a new item for free. Even though companies can’t change the behavior of bad actors, reducing RTO orders can prevent the financial losses linked with them.
Knowing how to reduce RTO in ecommerce means staying profitable.
These RTO-related costs can hurt your business’s bottom line:
- Shipping Charges. It costs money to return products. If your company offers free shipping, you factor shipping costs into the overall cost of the product. But, if a customer returns the product, you’ll pay for that shipping.
- Repackaging Costs. Shipped items are in special boxes with packing slips and postage. When customers return those packages, they must be unpackaged and put back in inventory. Then workers must repackage them to ship them to a new buyer.
- Damaged Products. When people return products, they sometimes go through various warehouses and are shipped with many other products. Some products get damaged during this process.
- Handling and Overhead Costs. If a product sits on a shelf, it’s not earning money for your company. And if it finally ships, only to be returned again, it costs your business money.
- Expiration. Some products don’t last forever. Others only have value during certain seasons. If you ship a product, it gets lost, and is found after its expiration, you’re stuck with something you can’t sell.
How Can I Reduce RTO?
Reducing RTO can help your business and save you money. Here are some steps all business owners can take to reduce RTO.
Implement a Return Policy
A return policy helps you manage how you deal with returns and exchanges. Create a policy that sets expectations for customers, so they know what they can return or exchange and by when. Being clear in your policy will prevent any awkwardness or hurt feelings from customers. Customers will respect a policy if they know the rules before purchasing.
Focus on Quality
The higher quality your products are, the less likely customers are to return them. No one wants a faulty item, and customers won’t trust your company if they don’t believe you care about quality. So focusing on the quality of the products will do a lot to prevent returns.
Also, focusing on shipping material quality can help reduce RTOs too. Better packaging that protects your products means fewer items will be damaged when shipping, and you won’t have to replace broken things.
Introduce Sizing Chart for Clothing
Buying clothing online is the norm now, but customers can be frustrated by the lack of norms in clothing sizes. A Size 2 at one store could be a Size 8 at another. And many brands use their own sizing systems that aren't immediately clear to customers.
Giving customers access to a sizing chart makes it easier for them to know how big the clothing you sell is. It allows them to take their own measurements before purchasing. This process will cut down on returns because of incorrect sizing or because the customer purchased multiple items to ensure they got one that fit.
Elevate Value of Consumer Reviews
If RTOs are a common problem for your company, determine why. Reach out via automated email to your customers who return items and find out why they chose to do so. The information will help you determine what you can do as a business to prevent returns.
Incentivizing reviews from happy customers can help too. If a customer enjoys a product, encourage them to post a Google review with images, so others can consider their review before purchasing. Many customers will leave a review for something as small as a discount on future purchases.
Introduce Videos of Products
Allowing your customers to see your products in action before they buy will help them know what to expect. Video helps customers know exactly how the product moves or looks when used. And in turn, it cuts down on customers choosing to return a product because they didn't get what they expected.
Stay in touch with customers after they click buy. Let them know where the product is and how soon it will ship. The consistent updates will help customers stay excited about the product. And the more aware of the timeline and shipping schedule a customer is, the more it will reduce objections they have to the product. This process will help you keep RTOs low and build customer trust.
Facilitate Exchanges Instead of Refunds
Even if a customer is unsatisfied or needs a different product, make the exchange process easy for them. They invested in your business by making a purchase. You can keep them happy by offering to get them what they need instead of just returning the product. Doing this will help you reduce your RTOs and still allow you to make a sale.
Buyers expect quick shipping. Even if you aren't a retail giant that can offer two-day shipping on everything, there are always faster options. Faster shipping means customers don't have time to shop around while they wait for the product to reach them. You can offer faster shipping for an increased cost that the buyer selects when checking out. Or you can increase your prices to enable faster shipping across all products.
Personalized packaging and a branded unboxing experience can greatly affect your RTO rates. It can keep customers from leaving bad feedback about the product's state. Be sure to package all products nicely and send confirmation messages to customers informing them of delivery. This process shows you care about the customer's order as much as the customer does.
Run Your Ecommerce Biz Your Way
A lot of work goes into reducing your RTO rates and building customer trust. One thing you shouldn’t have to worry about is your website. With WordPress ecommerce hosting, Nexcess takes care of the website monitoring, leaving you to run your business.
Check out our fully managed WooCommerce hosting plans to get the peace of mind you deserve.