RTO is eating your profits – here’s how to fight back

Let’s talk about the ugly cousin of COD – RTO, or Return to Origin.

What is RTO?

In simple words, RTO happens when you ship an order, but it comes back to you without the customer receiving it.

Sometimes it’s because the address is wrong. Sometimes the customer refuses delivery. Sometimes they’ve gone cold – that “impulse” shopping urge vanished in 2 days.

The problem?

Every RTO costs you double shipping (forward + return), plus packaging, plus time. And you can’t resell every returned product as “new” – especially in clothing, where the packaging seal matters. And if it’s crushed inside, you can not resell it again without ironing it again.

Let me tell you a quick story to understand the real danger of RTO.

Back in early 2024 at Offnorth, we had a sudden sales spike after running an aggressive Instagram ad. Sales were up 50% that month. I was thrilled.

But when the courier reports came in, I realised something shocking: 35% of our COD orders came back as RTO.

We’d spent on:

• Shipping forward

• Shipping back

• Fresh packaging for resale

And here’s the killer: after subtracting RTO costs, our “record-breaking month” was actually a loss-making month.

That’s how dangerous unchecked RTO can be. And RTO happens most in COD. Here’s why.

Prepaid orders rarely come back. Why? Because when people pay upfront, they’re committed.

COD buyers, on the other hand, sometimes treat it like window shopping.

They might:

• Change their mind

• Find something cheaper

• Forget they ordered at all

• Or anything else out of 147 other reasons.

Some even place “fun” fake orders (yes, that’s a thing). But we can fight it. Here’s how to fight RTO without killing COD.

Here’s what worked for our clients and us:

1. COD Confirmation before shipping

Send a WhatsApp or SMS asking them to confirm their COD order. If they don’t confirm, don’t ship.

2. Block high-RTO pincodes

Courier partners track this data. Don’t ship COD there.

3. COD Fee

₹50 extra for COD makes casual shoppers think twice.

4. Limit the COD order value

No COD above ₹1,500 or ₹2,000. Higher value orders must be prepaid.

5. Predict RTO risk with tools like GoKwik

They flag high-risk orders before shipping.

6. Follow up after shipping

Send tracking updates and reminders like “Your order is arriving tomorrow.” It reduces “I wasn’t home” excuses.

Think of RTO as a leak in your water tank. If you keep filling the tank (spending on ads), but don’t fix the leak (reduce RTO), you’ll always waste resources.

Most small brands fail not because they can’t get sales, but because hidden costs like RTO quietly eat their margins. So here’s your takeaway: Keep COD for trust, but manage RTO like your business survival depends on it because it does.