Customer loyalty is probably the biggest intangible asset your business has. One of the ways you can ensure customers remain your brand advocate is to pay close attention to the delivery process.
Keep your customers informed about their delivery status at every step and ensure the shipment reaches them without a hiccup. But the latter is easier said than done.
The reason being delivery exceptions are extremely hard to control, and even harder is to reverse a situation where the order is returned to your warehouse. These instances are referred to as NDR (Non-Delivery Report) and RTO (Return to Origin) respectively in the logistics industry.
It takes time and hard work to gain the trust of your clients but frittering it all away is rather easy. What will happen if you do not improvise your delivery strategy? More importantly, how do NDRs and RTOs affect your bottom lines? Let’s find out.
How NDRs/RTOs contribute to Plummeting Profitability?
As if the intense competition of online retailing wasn’t enough, your business must also absorb the financial losses generated by unmanageable numbers of NDRs and RTOs.
Even more than the monetary loss is the loss of customers’ trust. It is highly likely that they will likely migrate to a different online business if your courier partner fails to deliver their packages on time, in more than one instance.
Here are some of the ways NDRs and RTOs scrape away the profitability of an online business:
1) Paying for the RTOs of Cash on Delivery orders
There is no doubt that Cash-on-Delivery payment is needed in markets like India, Vietnam, Saudi Arabia, and Taiwan.
Many of these country’s customers are new to online shopping and a bit wary of using digital payment options. They are not comfortable sharing details of their debit and credit cards when placing orders. Hence, they opt for COD.
But multiple studies have showcased that the maximum number of NDRs are generated when delivering COD orders. Some studies estimate nearly 40% of all COD orders are refused. Since the payment isn’t completed, it’s easier for customers to decline the receipt of the shipment.
Moreover, in situations where the deliveries fail, the retailer has no option but to pay for reverse shipping back to the point of origin. It is a major blow to their profitability.
2) Damage to goods during reverse shipping
With so many courier companies seemingly mushrooming each month, it can be difficult to differentiate between a reliable eCommerce shipping company and one that’s not. It is entirely possible for your chosen delivery partner to lack the ability to ship an RTO item with care and guaranteed professional handling.
After all, not every courier company puts in the same effort in maintaining high-quality reverse logistics as they do for forward logistics! The Internet is flush with reports of how online sellers have received their non-delivered items in a damaged state. At times, even incorrect items are shipped back.
The courier partner may shrug off any responsibility and simply state with zero empathy that the item was already in that state when it was picked up. As a business where trust is valuable currency, you simply cannot afford to try and resell that damaged product.
It means you’ll either have to dispose of the item, or try to repair it, both of which require additional cost and time. In other words, you’ll have to brace yourself for a serious monetary blow up.
3) Losing customers due to unsatisfactory NDR resolution
Your customers are your assets. Too many NDRs and RTOs can wipe out your loyal client base. Or, it can leave you trapped under the weight of additional customer acquisition costs every time a shopper leaves your brand owing to unsatisfactory resolution of their NDR cases.
One of the most common reasons for NDR (Non Delivery Report) is failed delivery due to reasons like errors in customer address, contact number, and their unavailability. Failed deliveries leave a bad impression on customers with five out of ten customers deliberately avoiding your brand on their next shopping spree.
Losing customers is a tragic outcome for your business, and not only because you lose potential revenue. It also impacts your net promoter score, and keeps away consumers when any bad reviews take rounds in social media. NDRs can thus seriously hit your bottom line in the long haul.
The Best Way to Handle NDR and RTOs
Maintaining customer satisfaction and ensuring consistent drops in NDR figures is a difficult task. You need to devise a strategy, including tying up with a professional courier partner and investing in an effective Non-Delivery Report (NDR) management software to ensure most of your existing customers remain with you.
Some of the issues with shipments can be handled to a great extent when you join hands with a responsible and top 3PL (3rd Party Logistics) companies that prides itself on its efficiency. Researching for such a partner in advance is something you must not ignore.
Conclusion
While NDR and RTOs can make things daunting, they are also areas where you can level up your business. Pair with an optimal NDR management software, keep track of your carrier’s performance, and create a two-way channel of communication with customers. Taking these first steps will help restore your customer’s trust and their association with your brand.
