How Non-Delivery Report (NDR) and RTO (Return to Origin) Impact Online Seller's Profitability

1) Understanding Non-Delivery Report (NDR) and RTO

Two common terms that every Ecommerce business in India will encounter are NDR and RTO. That's why we thought it would be important to discuss what exactly these acronyms mean. Let's start with NDR, which stands for Non-Delivery Report.

Major exhaustion that plagues Indian e-commerce last-mile delivery services is a high volume of delivery exceptions, which are basically disruptions in the delivery process. The most problematic of these delivery exceptions are failed deliveries, i.e., deliveries that are unable to be handed over to the customer on the first attempt.

These failed deliveries are notified to e-commerce companies by carriers as NDR. The goal with any NDR is to ensure the delivery is completed successfully. Now let's look at RTO.

This stands for Return to Origin. This is the title given to orders that are no longer deliverable and must now return to the origin warehouse. There, they can be refurbished, restocked and resold, provided they survive the journey.

Unfortunately, RTOs contribute to heavy losses for your eCommerce business, as the customer's money is refunded even though the shipping charges levied on you are not. As you can see, these two terms converge at certain common points. However, you'll learn in this article how intertwined they really are and how the management of one of these translates to the management of both.

2) How Does a Non-Delivery Report Become an RTO

When a delivery agent is unable to hand over an order to a customer on the first try, it is marked as an NDR. The next thing the carrier does is arrange for another delivery attempt to be carried out, usually by a different delivery agent. Most carriers limit the number of delivery reattempts to 3.

But what happens to an order after 3 failed delivery attempts (i.e., 3 times it was marked as an NDR)? Unfortunately for Ecommerce businesses all across the country, the order then gets automatically marked as an RTO.

And resulting losses and blows to customer experience follow. Since most large companies consider managing RTOs to be an unavoidable task, managing NDRs becomes a big part of that task. This is because unresolved NDRs are a leading cause of high RTO% in India.

3) How Do NDR and RTO Impact Profitability of Online Sellers

We’ve given you a gist of how NDR and RTO works in the ecommerce market. But to really gain clarity on how each of them operates, we thought it might be useful to break down the negative impact based on its actual effect.

These “side-effects” of RTO and NDR can be extremely damaging to the growth and profitability of any business in the long run. Listed below are the major immediate effects of NDR and RTO and a brief insight into how they undermine profitability. 

3.1) Delayed Delivery

Customers are always anxious until their order reaches them. When an NDR occurs, it is always viewed as another delay in completing the delivery. This can leave customers more anxious and thereby more likely to cancel the order. 

3.2) Poor Customer Experience

As if anxiety were enough to make customers dislike the delivery experience, slow reactions to NDR can result in the order not getting delivered at all. Customers will then constantly associate the delivery failure with your brand identity. 

3.3) Unnecessary Shipping Costs

At the end of the day, you don't want your business to be taking on any unnecessary losses. Unfortunately, when an RTO occurs, you're still left holding the bill for the forward shipping charges even though you lost a customer. And there could also be hidden charges associated with the return journey. 

3.4) Potential Loss of Product

Speaking of the return journey, it's important to note that it is a long and arduous one. Not all carriers provide the best reverse logistics services. This means that there's a high probability of your product getting lost, damaged or stuck somewhere on its way back. This contributes even more to the already heavy toll paid for RTOs. 

3.5) Frequent Cancellations

We already mentioned that delays can result in cancellations. But so can failed deliveries, unpleasant delivery experiences and even slow resolutions of failed deliveries. An NDR converted into RTO is bad enough, but the cancellations involved in unmanaged NDR is also very problematic.

4) Features of NDR Management Software That Can Reduce RTO

Both NDR and RTO can seem like an incredibly daunting part of ecommerce activity. Especially when you realise that they cannot be avoided completely at any point. However, you still have many options for dealing with NDRs and reducing RTOs. Most ecommerce businesses rely on NDR management software for this.

One of the biggest benefits of using an NDR management software is gaining access to a designated workflow for dealing with NDR. Through this workflow, you will know exactly what to do every time you receive an NDR notification.

And better still, a good NDR management software will know what to do and configure its actions to your specific business requirements. With the help of an NDR management software, your ability to handle NDR will be given the following boosts. 

4.1) Faster Notification of NDRs

With a good NDR management software at the helm, you can receive NDR updates in real time. Using API integrations, updates are sents directly from the carrier platform to your dashboard. So as soon as the delivery agent sends the carrier an NDR notification, you receive the same notification. This saves you a lot of time. 

4.2) AI-Based Determination of Cause

The best way to identify and classify NDR is by their cause. But it's a tedious process to sift through each and every NDR to categorise them manually. Using an AI-enabled engine, an NDR management software will do that for you instantly when the update is received.

4.3) Sending Cause-Specific Customer Queries

Once the NDR has been classified in accordance with cause, customers need to be approached for answers. Firstly, you'd want to make sure you reach out to customers before they reach out to you.

You also want to send issue specific queries so they know that you've understood what transpired. An NDR management software automates this process, sending customers an immediate issue-specific query to solve their order. 

4.4) Empowering Customers to Respond Quickly

Automating these issue-specific queries can speed up the pace at which customers receive their queries and are informed. But how to make sure they respond quickly enough for you to act on their information?

A smart NDR management software will send simplified queries with multiple-choice options or text-fill options requesting extremely specific information, like an alternate contact number or nearest landmark to the delivery destination.

4.5) Updating Carriers in Real-Time

Now that you've gotten a response from customers, and in record time no less, you need to get that information to the carrier. Only then can the delivery agent make their next delivery attempt an informed one.

Emailing the information to carriers can seem convenient but an email can easily get lost in an inbox leading to further delay. Again, using an NDR management system, your customers' responses can be automatically pushed to carriers to complete delivery. 

4.6) Following Up After Each Delivery Attempt

On those rare occasions where delivery reattempts continue to fail, despite following the designated NDR protocol, you must remain equally vigilant.

With an NDR management software, that means again using automated communications to follow up with customers on why the delivery failure occurred and how it can be carried out successfully. 

4.7) Identify Fake Deliveries With Greater Accuracy

In addition to directly affecting the process of converting failed deliveries to successful ones, an NDR management software lets you deal with another common but frustrating type of NDR, i.e., fake deliveries.

By monitoring all NDRs based on their cause, you can also track fake deliveries. This enables you to note where and how they occur most frequently. You can then initiate strategic actions to reduce them, preferably with the aid of your carrier and eCommerce NDR management software. 

4.8) Using Analytics to Reduce NDRs

Finally, NDR management software have a huge role to play in data collection and analytics. Much like how it enables you to track and monitor fake deliveries to get rid of them, you can monitor all your NDRs over time to determine what complexities you may have missed and what are the solutions that present themselves in the data.

5) What are the Most Common Reasons for NDR

The best workflow for dealing with NDR, as you can see in the above paragraph, is a cause-based workflow. This is because retrieving information from customers and resolving an NDR becomes easier when you can act based on the cause for the NDR to occur.

Further, you can also determine which NDR can be resolved quicker and with more certainty based on the reason behind the NDR. To explain how this works with a little more clarity, here are some of the most common submitted reasons for NDR occurrences. 

5.1) Unavailability of Customer

Customers may not always be available at the delivery destination for the delivery agent to hand over the order. When a customer is unavailable and cannot be reached for alternate delivery options, the delivery cannot be completed. 

5.2) Delivery Rejected by Customer

Customers maintain a certain amount of discretion with respect to online purchases, as it’s their money that they’re spending. Some customers exercise this discretion by simply refusing to accept the delivery and rejecting the order. 

5.3) Delivery Rescheduled by Customer

At the time of delivery, if a customer is unavailable or unable to take possession of the order but still willing to do so, they can arrange for an alternate delivery date and time. The same should be specified by the delivery agent in the NDR update. 

5.4) Fake Delivery Attempt by Carrier Agent

A fake delivery refers to a situation in which the delivery agent makes no attempt to deliver the order but goes ahead and updates the status of the delivery as failed via an NDR notification. These are extremely troublesome. 

5.5) Incorrect Delivery Information

This refers to situations in which a customer may accidentally or unknowingly submit incorrect information related to their contact information or the delivery address. These can hinder successful delivery but can easily be rectified through issue-specific customer queries. 

5.6) Payment Not Ready

Many customers in India prefer opting for COD (cash-on-delivery) methods of payment. While offering this allows you to gain the trust of a larger customer base, it also means NDRs may occur when customers are unable to make the payment at the time of delivery. Some may select an alternate time for delivery, but others may simply refuse to pay. 

6) Conclusion

Both NDR and RTO are bad for business. That much has been made clear by this point (I hope?). But you don’t just have to sit back and take it. As an ecommerce enterprise operating in India, you are empowered to pave the way for progress and address the problems and pains that plague so many others in the industry.

And while neither is completely unavoidable, there is plenty that you can be doing to not only mitigate the damage caused by both but also to turn them into opportunities.

All you need to do that is keep yourself informed on your business trends and employ the right resources. An NDR management software can go a long way in ensuring most NDR get added to your order fulfillment numbers and not your RTO numbers.