In recent years, e-commerce has transformed how consumers shop. They simply scroll through stores, add products to the cart, and place an order within minutes.
But with increasing convenience comes new challenges—especially for sellers.
One of the biggest operational challenges for online businesses today is increasing product returns and RTO (Return to Origin) cases. In fact, the average order return rate was 24.5% for e-commerce orders in 2025. This means businesses suffer heavy losses as every one of four orders placed online ends up back with the seller.
Increasing RTO rate becomes more concerning for brands that allow Cash on Delivery (COD) orders. Since customers don’t pay upfront for the product, there’s a higher chance of cancelled orders, fraudulent attempts, and refusal at the doorstep.
To overcome these challenges, online sellers must learn how to reduce RTO in ecommerce without hurting the customer experience and business profitability.
In this blog, we will understand why COD orders usually have high return rates and discuss practical ways to reduce RTO for ecommerce orders. The goal is to improve the overall delivery and return experience for customers and convert more sales.
What is RTO in Ecommerce?
RTO, or Return to Origin, occurs when an ecommerce order is not delivered and is sent back to its origin or the seller due to non-availability, refusal, wrong address, or failed verification. Understanding why RTO happens is the first step toward identifying how to reduce RTO in ecommerce and improving operational efficiency.
In e-commerce, an RTO is different from an order return, which happens after a customer receives the product. RTO occurs before delivery is completed, making it more costly because the seller bears both forward and reverse logistics charges. High RTO rates negatively affect profits, inventory cycles, and business operations.
How to Reduce RTO in Ecommerce
Reducing RTO cases starts with improving the order journey from checkout to final delivery. Businesses wondering how to reduce RTO must focus on accuracy, communication, and customer intent. When every stage of the process is optimized, the chances of failed deliveries and unnecessary costs significantly drop.
Let’s break down some effective ways to reduce RTO in ecommerce and increase successful deliveries;
Verify Customer Details
An effective way to reduce RTO is to verify customer information before shipping. Confirming phone numbers, addresses, and order intent helps eliminate fake entries and incomplete details. Automated verification tools or manual confirmation calls can significantly reduce delivery failures caused by incorrect contact information.
Improve Address Accuracy
Using smart address forms, auto-fill features, and location-based suggestions ensures customers provide complete and accurate delivery details. Better address accuracy reduces delays, prevents routing errors, and improves last-mile success rates. This step also contributes to smoother delivery and return processes.
Allow Multiple Delivery Attempts
Customers may miss calls or fail to receive packages on the first attempt. Allowing multiple delivery attempts or offering flexible delivery slots increases the chances of successful completion. This is particularly useful for COD orders, where customers may need an additional reminder or a better-suited time for receiving the package.
Use Order Confirmation Calls
Adding an extra step for confirmation helps filter out impulse buyers, fraudulent orders, or customers who may change their minds later. While it may increase costs, a quick call or OTP confirmation ensures the buyer genuinely wants the product, reducing the likelihood of order return before the parcel even reaches their location.
Provide Real-Time Delivery Updates
Timely notifications and transparent delivery tracking keep customers informed about their order’s status. This reduces confusion, missed deliveries, and cancellations. SMS, WhatsApp, or email alerts help customers prepare for delivery, improving completion rates and decreasing the chances of unnecessary returns.
Introduce Prepaid Incentives
Encouraging prepaid orders through discounts, loyalty points, or cashback reduces COD-associated risks. Setting COD limits based on customer history also minimizes fraudulent attempts. These strategies help merchants streamline operations and understand how to reduce RTO by promoting genuine and committed orders.
Why COD Order Return is Higher in Ecommerce
COD purchases often face more challenges than prepaid orders, leading to a higher order return rate. Since customers don’t pay upfront, there’s less commitment, higher refusal chances, and more delivery failures. Understanding these reasons helps ecommerce brands address RTO issues more effectively and improve profitability.
Here are the key reasons why the order return rate is generally higher with cash-on-delivery:
Low Customer Commitment
Since customers do not pay before receiving the product, they may lose interest or change their minds easily. This lack of financial commitment increases the chances of cancellations and refusals at the time of delivery, raising RTO cases significantly.
Incorrect or Incomplete Addresses
Many COD failures occur because buyers enter wrong or incomplete delivery details. This causes failed delivery attempts and unnecessary returns. Improving address verification can reduce these issues and streamline delivery and return operations.
Unavailability at Delivery Time
Buyers may not be available when delivery agents arrive, especially if they weren’t informed in advance. Missed delivery attempts are more common in COD orders, where customers don’t coordinate actively, resulting in a higher number of returns.
Impulse Buying Behavior
COD makes it easier for customers to place spontaneous or emotionally driven orders without thinking through the purchase. Such impulse decisions often lead to later cancellations or refusals, contributing to rising order return rates.
Refusal Due to Hidden Costs
Some customers refuse packages when final delivery charges, shipping costs, or additional fees seem higher than expected. This mismatch between expectation and final cost often results in last-minute refusals and increased returns for COD orders.
Fraudulent or Fake Orders
COD orders sometimes attract fake entries, prank purchases, or fraudulent attempts. Since there is no upfront payment, such orders proceed until delivery fails. This issue significantly increases delivery and returns costs, ultimately impacting profitability.
Tips to Minimize COD Order Return
Minimizing returns for COD orders starts with better communication, customer validation, and smarter checkout practices. Implementing proven strategies helps brands understand how to reduce RTO and COD returns while improving overall order success rates across different regions and customer segments.
The following tips can help sellers ensure lower returns for COD orders:
Enable OTP Verification: OTP confirmation filters out fake or uncertain orders, ensuring only genuinely interested customers proceed with COD purchases.
Share Delivery Updates: Timely tracking alerts keep customers prepared, reducing missed deliveries and unnecessary order return incidents effectively.
Allow Changes in Delivery Details: Allow customers to modify address, contact number, or other details, preventing failed deliveries due to incorrect information.
Limit COD Usage: Set COD restrictions for repeated cancellations to improve success rates and streamline delivery and return workflows.
Offer Delivery Time Slots: Allowing customers to choose preferred delivery timings reduces refusals caused by unavailability during drop-off hours.
The Bottom Line
Increasing RTO cases is a persistent challenge for the ecommerce industry. The key steps towards understanding how to reduce RTO in ecommerce effectively are to improve address accuracy, strengthen verification processes, and analyze customer behaviour. By doing so, sellers can reduce losses and ensure business growth.
COD shipments require extra attention because purchase intent is often lower and delivery challenges are higher. By optimizing communication, offering prepaid incentives, and validating orders carefully, ecommerce brands can significantly reduce COD order return rates and ensure smoother, more profitable operations.