Learn how leading D2C brands are using Whatsapp Automation to reduce RTO
We all know that in the last few years of the pandemic, more and more people across the country, across tiers, are adopting online shopping.
While this is fantastic for Ecommerce brands, with potential customers growing rapidly, there is a downside marketers are only now paying attention to.
Returns. Or rather, a high volume of RTO (Return-to-Origin) orders.
In this post, we’ll break down what RTO really means, the different reasons why it has become a headache for D2C brands and most importantly, what campaigns you can run + why we recommend sending them on Whatsapp!
What is RTO?
To increase trust in shopping online, D2C brands have to make their return process easy and convenient. Yet, as a result, they also have to bear the costs of having it shipped back through cumbersome and lengthy processes.
With more than 75% of orders that are placed being cash-on-delivery (COD), at least 1-3 orders get returned.
RTO, or Return-to-Origin, is this process where the order never reaches the customer or acceptance is denied and gets sent back to the warehouse. RTO gives you an idea of how many returns your brand is processing and how much the reverse logistics (the cost of returns) you’re bearing every month.
But before we get into the reasons for high RTO and what you can do about it, you need to be able to calculate your brand’s return rate.
How to Calculate RTO?
To calculate RTO, you need to take the below metrics-
- No. of orders there were not accepted
- No. of orders that were not delivered
- No. of cancellations
- No. of returns after deliver
- Total orders
Once you have these, use the below formula-
RTO = Orders not accepted + Orders not delivered + Cancellations + Returns after delivery ———————————————————————————————————————————
Not knowing your RTO rate can be detrimental to measuring and optimising CAC (Customer Acquisition Costs) and CLTV ( Customer Lifetime Cycle Value).
Why is RTO Becoming a Big issue for Ecommerce?
RTO costs you in several ways due to reverse logistics, like having to bear the costs of-
- Forward Shipping and Return Shipping
- Quality Check of returned products before adding them back to your supply
- Repackaging and restocking related costs
- Refurbishing damaged products
- Expiry related costs
- Blocked inventory
- Time and effort spent by your team processing returns
- Cash handling charges if it’s COD
- Chargeback for Orders paid via debit and credit cards, and
- Cost of re-selling
Many brands already offer free shipping to nudge more customers to order online. Returns take a big toll on revenue and, left unchecked, can lead to high RTO rates that we have seen among brands, around 25-30%!
Why is this rate so high, especially in India?
Why do Customers Return Products?
Remember when we mentioned that the market penetration of D2C brands is growing larger, and more people across India are also shopping online?
Despite that rising trend, your customers are still wary of shopping from an online store.
Compared to shopping physically, where you pay for what you see, online shopping usually doesn’t come with a reassuring salesman to guide you through the process.
(Our entire business premise is to convince you, as a D2C brand, that guiding your shoppers online with recommendations and precise knowledge is essential, but you can read more about that here.)
You can go back to a physical store and raise a complaint and be taken seriously almost immediately- yet, when it’s an online brand- you already feel you won’t be listened to or that resolution will take a lot of time.
As a result, distrust rises at the onset when they even start to explore your product catalogue. Waiting for your product increases a customer’s scepticism and wariness, even if it’s 3-5 days.
And when the order finally comes, there are many reasons why their doors are slammed on your courier’s face. (We do mean metaphorically while knowing that is literally what also happens).
Common Reasons for RTO in Ecommerce
Here are some of the main reasons for high RTO rates in D2C brands-
- The customer is unavailable to receive the delivery
- The wrong product is delivered
- The wrong size, shade, etc. of the product is delivered
- A damaged product is delivered
- The product looks different from the pictures and details displayed
- The product doesn’t live up to expectations
- The address and phone number given by the customer are incorrect
- Fraudulent orders
- COD orders
- Customer orders multiple sizes or shades to find the right fit and returns the rest
How do you solve each of these issues?
There are a few recommended tips from the e-commerce industry, along with our personal findings that we will now take you through, that will reduce your RTO.
But to make your mouth water, figuratively, we mean, take a look at the results we have managed to get with our clients – numbers your brand can achieve if you put these tips into play!
Impact of Reducing RTO
When you successfully reduce your RTO rate, it will lead to-
- 10-15% decrease in RTO Rates
- 5-10% increase in paid orders
- 15% increase in fulfilment rate
All of these will directly increase your revenue!
Now that has hopefully got you excited. or sceptical – that works too; all we suggest is to continue reading 🙂
How to Reduce RTO in Ecommerce
Share Clear and Thorough Product Information
If you shop online, you know you’ll spend time zooming in on product images, often in the case of clothing, looking for people similar to your body shape to see how it might look on you.
More clothing and apparel brands are realising a gap exists between showing stunning, idealistic product images and how they would look in daily life. Returns due to wrong or confusing products have led to the ‘Shade/Colour may look slightly different in different lighting’ statements across D2C product pages.
This is why it’s essential that your customers feel confident in buying from you, and to do that, you need to do the following-
- Provide detailed descriptions of features
- Display multiple images of the product from all angles (360 degrees)
- Include a dynamic sizing chart
- Show them how the product might look in their life – for example, room mockups for paintings, 3D try on’s for glasses, makeup shades, or even beautiful flat lays of your product in your person’s lifestyle/home.
- Give simple steps on usage.
- Emphasize the impact and benefits of using your product
- Display customer Reviews in the same fold (especially the ones with images) to increase trust from social proof
- Send customer reviews or user-generated content after they purchase to keep the product recall positive
The issue that happens from ensuring every detail is mentioned is that it can get overwhelming. Heavy PDPs (product description pages) take a toll on visual branding and often confuse your customer, leading to misaligned expectations when the product finally reaches the customer.
Offer Consistent Tracking
That anxiety I mentioned earlier, waiting for your product to arrive?
Waiting is an uneasy process for most of us. But you can reduce this anxiety by communicating with your customers through timely updates.
Sharing order confirmation alerts and shipping updates will go a LONG way in reducing returns.
Consider customers buying your products for a special function like someone’s birthday or an event- if it reaches after that date, it is likely that it will be returned.
Real-time Tracking updates are non-negotiable in today’s day and age. It is also important to keep your customers engaged until they receive your product. If you’re creative, you can find new ways to share tips on usage or more testimonials to keep them interested until they receive your product.
However, a big disadvantage of sending these updates via email or SMS is that it’s very likely to be missed.
Ensure Preferred Time Slots for Delivery + Confirm Customer Availability
You need to inform them not only of the initial and updated delivery date but also confirm their availability.
No, not everyone has a guard or a neighbour they can count on. You can reduce your RTO significantly by allowing them to choose time slots that ensure their availability.
Here, it’s not the issue of them not wanting your products- in fact knowing it can get delivered when they are not at home is also a reason for online shopping anxiety. This also allows your customers to reschedule the delivery, making them feel valued and their time.
Here too, with email and SMS’s dwindling open and read rates, this tip may be inefficient being communicated via such mediums.
Verify Contact Details like Phone Number and Address
Sometimes it’s a mistake, with a number missing due to speed typing, like a wrong pin code or incorrect phone number, and sometimes it is intentional.
Fraudulent orders are a big reason for high RTO orders. To tackle this, you must have a verification process put in. You can do this by automating verification via calls or messages or having your customer support team call and confirm.
But it’s not scalable. And many people refuse to pick up calls from any number that looks potentially like spam.
Accept + Encourage Online Payments with Incentives
60% of all orders are COD orders, and one in three orders are returned. As a result, you need to find ways to communicate your online payment methods and nudge them to pay online.
Once it’s an online order, customers are less likely to cancel their order, as they are more financially committed, in a sense, to return it because they don’t want to deal with the refund process.
Offer Gifts + Discounts
Be it COD or online paid orders, you can sweeten the deal and reduce returns by sharing samples as a gift or offering a customised discount code. It’s harder to return when there are more surprises in your order. The good ones, we mean!
Improve Product Packaging
Do you know that damaged products make up around 80% of all RTO orders? If this is a recurring reason for your returns, you must invest in better packaging and delivery partners. Here, too, you can show your brand personality by investing in your packaging to inspire more positive and exciting feelings in your customer when they see it arrive.
Invest in Fast Shipping (One-Day or Next Day Delivery)
Did you know that 41% of customers are ready to pay extra for same-day deliveries? In fact, as we’ve seen with Amazon Prime, 24% of customers will pay extra shipping charges if the product is delivered within one or two hours.
Often people order at the very last moment, especially supplies, and need them asap. Physical stores are preferred for this reason.
You can offer faster shipping by having great logistic partners and investing in multiple warehouses near your most active audience’s pin codes.
Convert Returns into Exchanges
You can’t be lax when there’s a chance for a conversion. Customers might like your product but get the wrong size or shade. So make sure you offer an option to exchange the item and convert them into a customer.
Send Refunds into your Brand Wallet
To reduce chargebacks and inspire your customers to buy again from you soon, you can give them an option for a refund to come to your branded wallet. They can then use that to order from you again.
Black List Customers with High Return Rates
To tackle fraudulent orders, keep a tab for customers that have alarmingly high return rates. In such cases, verifying with a phone call makes sense, as these should be rare instances. If required, blacklist such customers.
Analyse and Manage your NDR (Non-Delivery Reports)
None of these solutions can be considered if you don’t know the exact reasons for your brand’s high RTO.
NDR or Non-Delivery Reports track the reason for returns and are done in real-time; some of these return orders can be converted by rescheduling or exchanging.
Now that we’ve covered solutions and highlighted why they fail when implemented through traditional mediums like IVR, SMS and email, allow us to show you the difference in results when you do it through Whatsapp.
- India’s 340 million monthly active WhatsApp users spend an average of 38 minutes on the app every day.
- Users check WhatsApp at least 25-27 times a day, making it more likely for them to read your messages.
- Additionally, customers engage the most on WhatsApp and read 80% of messages within 5 minutes of receiving them, making it easy to re-schedule delivery or even remain engaged until their order arrives.
- Finally, WhatsApp Business has an open rate of 99%, while email and other traditional marketing methods reach only 5-10% in open rates.
These are some of the reasons why Whatsapp, instead of other mediums, is more relevant, to reduce RTO. In Whatsapp Automation Campaigns, there are 3 we recommend you send to get your returns to a minimum.
3 Ways to Reduce RTO with Whatsapp Marketing Campaigns
COD Order Verification Campaign
COD orders are usually due to impulse shopping, sometimes due to fraudulent reasons and sometimes because of manual typing errors.
To solve all of these, you need to send a COD order verification message on WhatsApp. Here’s what you should do:
- Send pre-configured notifications on WhatsApp
- Get reconfirmation from your customers to double-check the authenticity
- Include personalized information from your store’s backend like Order value, Order items & Address of the customer
- Prompt customers to take action by adding clear buttons: [Confirm] [Modify] [Cancel]
Because of 2-way messaging, these Whatsapp campaigns are no longer dull, annoying interactions. Factoring in their responses will help make your communication more effective.
In Fact, our clients, Clinikally and June Shop, have observed a 3X increase in engagement with these 2-way COD verification campaigns!
COD to Prepaid Conversion Campaign (C2P Campaigns)
What about orders that get cancelled because the customer, while waiting for delivery, finds a better deal or price somewhere else?
In this case, in all COD cases, you must encourage them to convert their payment method to an online one. To do this, you need to incentive your COD orders to convert them to prepaid orders.
Take a look at the message below.
- Once a COD order is placed, send a WhatsApp message confirming the order and offer an attractive discount if they pay online within a limited time.
- Include personalized information like Order details (product names and quantity), Flat/percentage discount offered, Old and new pricing and Direct payment links.
With C2P (Cash to Prepaid) campaigns offering a percentage discount, our clients, Timbresonic, Juicy Chemistry and Attitudist, achieved a 5% increase in their prepaid order placements.
Our C2P campaigns stand out additionally because we offer-
- Direct integration with payment gateways
- Fulfilment time upgrades (payments are taken only until orders are fulfilled)
- Flexibility in adjusting or removing shipping price
- Flexibility to add discounts,
- Ability to feature complete order & payment details
But the best part?
Our Klavio-like flow-builder for Whatsapp can do a one-time, quick setup to automatically trigger notifications after a COD order is placed. You can go beyond the basics and hyper-personalize your messages based on data like purchase value, discount code usage, and more!
Automated NDR Management Campaign
An NDR (Non- Delivery Report) is generated whenever a return is initiated. With NDR messages, you can reach out to customers in real-time and effectively reduce RTO by 50% and eliminate costs incurred due to reverse logistics.
Automating this on Whatsapp is far more beneficial and effective than traditional methods like IVR or SMS. When the buyer is notified on Whatsapp, we’ve noticed that the Number of preferences recorded is high, leading to more rescheduled deliveries and low RTO!
With LimeChat, it is a one-time, quick setup to automatically trigger NDR notifications. When an order is not delivered to the user, a sequence of automated NDR messages is sent to re-attempt delivery the following day.
So there you have it – a deep dive into recognising why RTO is incredibly important for marketers to reduce, why customers return and what solutions you can employ to reduce it.
But more importantly, how can you increase those solutions’ efficacy by sending these three specific campaigns on Whatsapp.
Book a demo here if you want to learn how we can make this happen for you!