With the dramatic rise in the fortunes of the E-commerce sector in India has come a range of problems that are unique to online businesses. Needless to say, these problems are present worldwide and are not limited to India alone.
Two of the major issues that have persistently plagued online businesses and their associated last mile delivery logistics backbone are NDRs and RTOs.
According to a recent study by the Harvard Business Review, e-commerce businesses lose billions of dollars each year due to NDRs and RTOs.
However, if we keep the business loss aside, these delivery challenges also harm customers’ shopping experience. Now, the question is what exactly these NDRs and RTOs are. In this article, we’ll understand what they mean and why they are a major hazard in your way to achieving eCommerce success.
What are NDRs & RTOs?
In E-commerce, NDRs mean ‘Non-Delivery Reports’, and RTOs stand for ‘Return to Origin’. NDRs are filed by the courier partners of an online business once the first delivery attempt fails. Failed deliveries can happen for multiple reasons. These include incomplete addresses, customer unavailability, adverse weather conditions, and so on.
Subsequently, a maximum of 3 separate attempts to complete the delivery are made. If they fail as well, the courier partner will label that specific parcel or package for reverse shipment. Then it will be remarked as RTO.
These seemingly simple logistics issues are also the stuff of nightmares for most online businesses. Too many non-delivered items will eat away at their profit margins and also cause significant customer churn.
Concurrently, a disproportionate number of RTOs in a certain period will also mean that the seller has to pay its courier partners out of its own corpus despite its shipment not being delivered.
The double whammy is a leading cause of cost escalation.
Why do NDRs and RTOs happen in online businesses?
Simply put, these aspects have a negative impact on eCommerce businesses. One undelivered parcel is a liability for the company.
To remain profitable and economically viable in an atmosphere of fierce competition, online businesses must ensure that the number of non-deliveries comes down. This can be achieved by understanding why NDRs are happening in the first place.
There are several reasons why items may remain undelivered. Shipments may have the wrong address, or perhaps an incomplete one. Often, the recipients cannot be contacted for varying reasons. Sometimes, the customer may flatly refuse to accept the delivery.
Another problem is with COD orders. Cash-on-delivery modes of payment are extremely common in smaller towns and cities.
Since the parcel was not previously paid for, there is a high chance that the customer may not be able to pay for it when delivery is attempted. CODs are known for their many benefits, but this is one of its untold drawbacks.
Estimates from on-field agents highlight that around 40% of all COD orders are unfulfilled and may have to be returned back to the seller.
The point that online retailers need to understand here is that updates on NDRs are extremely important. Once the courier partner has made the mandated 3 attempts, businesses don’t have any option left but to ask for the parcel to be shipped back to its warehouse or hub.
How can you handle the NDRs and RTOs for improved business operations?
To be honest, you can’t completely avoid these problems. They will arise in one way or another. But, there are some actions that you can take to prevent failed deliveries and RTOs to a great extent. For example:
1) Go for an NDR management software
One of the easiest solutions to deal with NDRs is to invest in an automated Non Delivery Report (NDR) management system. Once the delivery agents mark a delivery as “failed”, these solutions segregate them into issue-specific buckets and try to reach out to customers via multiple channels to collect their feedback.
Next, they send that feedback again to the agents, so they can make the deliveries successful. In a nutshell, these NDR management software solutions tackle the whole process in an automated way without much human intervention. There are lots of NDR systems available on the market. You can go for any of them as per your choice.
2) Integrate an address verification solution
As we already discussed, the major reasons for NDRs (non delivery report) is inaccurate addresses. Thus, integrate an address verification tool into your eCommerce website. In case your customers enter the wrong addresses or pin codes, it will highlight them and reduce the chances of failed deliveries.
3) Reach out to your customer via multiple channels
Nowadays, customers prefer different channels for business communication. Some prefer email while some use SMS. On the other hand, most customers prefer WhatsApp for business chat.
Now, imagine sending a failed delivery email to a customer who mostly uses WhatsApp. Chances are you will not be able to contact the customer to bring their updates.
That’s why it’s always a better option to consider various communication channels to reach the customer in case any issues occur.
4) Let your customer reschedule the deliveries
Oftentimes, customers get trapped in their busy schedules on the day of delivery and can’t receive the parcels. This further leads to failed deliveries.
In such a situation, if you provide them with the flexibility to reschedule the delivery, they will be able to receive the parcel on their preferred day. On the one hand, this approach will reduce the number of NDRs and RTOs in eCommerce, and on the other hand, customers’ shopping experience will be improved.
5) Take action on fake delivery attempts
In rare cases, the delivery agents mark the delivery as “canceled by customers” without even trying to reach them, which increases the RTO%.
To deal with this problem, you should opt for an “OTP-based cancellation process”. It’ll send an OTP to the customers. Until the OTP is entered into the portal, the order won’t be canceled. This is a great method to lower the number of RTOs.
Conclusion
The bottom line remains to choose a professional courier partner plus an NDR management software to boot. At the same time, go for the NDR management methods we mentioned above. These will fetch NDR numbers in real time and give businesses the chance to keep RTO figures down.
