Every undelivered COD order costs your brand twice, once for shipping it out, and once for shipping it back. Add processing, restocking, and stuck inventory, and the real cost per RTO is ₹180-240. For a D2C brand doing 10,000 orders per month with a 30% RTO rate on COD, that's ₹5.4-7.2 lakh lost every month. Over a year, ₹65-86 lakh - enough to fund an entire team or a full quarter of ad spend.
RTO isn't a logistics problem you can hand off to your shipping partner. It's a full-funnel issue that starts at your checkout page and ends at your customer's doorstep. The brands that bring RTO below 15% do it by intervening at every stage of the order lifecycle, not by applying a single trick.
This guide covers RTO reduction strategies organized by when in the order lifecycle you can apply them because timing matters as much as the tactic itself.
Before diving into strategies, here's the full cost breakdown most brands undercount:
Direct costs per RTO order:
Hidden costs most brands miss:
The industry benchmarks:
If your RTO rate is above 20%, you're not alone - but every percentage point you bring it down directly improves your contribution margin.
The cheapest RTO to handle is the one that never ships. These strategies filter out high-risk orders and shift payment behavior before the package even leaves your warehouse.
This is the single highest-impact lever. Prepaid orders have 4-8% RTO versus 28-35% for COD. Every COD order you convert to prepaid before dispatch eliminates the RTO risk almost entirely.
What works: display a ₹50-100 prepaid discount prominently on the checkout page, not as a hidden coupon, but as an inline banner next to the payment options. Research shows absolute discounts (₹50 off) convert 31-38% of COD-preferring customers to prepaid, while percentage discounts only convert 18-23%. Free shipping on prepaid orders is another powerful nudge customers disproportionately hate paying for shipping.
Make UPI the default and most visible payment option. Over 491 million Indians use UPI, and it reduces checkout friction to a single tap. If your Shopify checkout buries UPI under credit card fields, you're losing prepaid conversions to laziness, not intent.
For the full breakdown of COD-to-prepaid conversion methods, see our dedicated guide.
Incorrect or incomplete addresses cause 15-20% of all delivery failures. These aren't customer rejections, they're logistics failures that become RTOs because the courier couldn't find the location.
What works: integrate address auto-complete with pin code validation at checkout. When a customer enters their pin code, auto-fill the city and state. Add mandatory fields for landmark and building name. Some Shopify checkout solutions (GoKwik, Shiprocket Checkout) auto-fill from a database of 15 million+ saved addresses, which eliminates typos and missing details.
Send an address confirmation via WhatsApp or SMS immediately after order placement: "Hi [Name], please confirm your delivery address: [Address]. Reply YES to confirm or share the correct address." This 30-second step catches errors before the order ships.
Not all customers or locations deserve the COD option. Data-driven gating removes COD for the riskiest segments without affecting your broader customer base.
What works: pull your RTO data by pin code from your shipping partner's dashboard. Disable COD for pin codes where RTO exceeds 40% - this alone can cut overall RTO by 15-20%. Tag customers who have previously refused delivery or cancelled COD orders, and remove COD for their future orders. Set a minimum order value for COD (₹500-1,000) to filter out low-commitment impulse purchases.
Shopify apps like COD King allow rule-based gating by pin code, order value, product category, and customer tags. For more advanced logic, AI-powered checkout solutions can dynamically show or hide COD based on real-time risk scoring.
Product mismatch is the RTO cause that's entirely within your control. When customers receive something different from what they expected, they refuse it at the doorstep.
What works: sizing issues cause 41-48% of fashion-related RTOs - add detailed size guides with model measurements, not just S/M/L labels. Poor product imagery accounts for 23-29% of returns in beauty and personal care, show the product from multiple angles, in real lighting, with video where possible. Write honest product descriptions that set accurate expectations rather than overselling.
The window between order placement and dispatch is your best opportunity to verify genuine orders and convert COD to prepaid. Most brands ship within 24-48 hours, use that time actively.
Send an automated WhatsApp message within 30-60 minutes of a COD order offering a small discount to switch to prepaid. Include a direct UPI/Razorpay payment link. D2C brands running these flows report 15-30% of COD customers converting.
This is the highest-ROI post-order intervention. The customer has already committed to buying you're just giving them a reason to pay now instead of later. For templates, timing sequences, and best practices, see our step-by-step COD-to-prepaid guide.
For high-value orders (₹1,000+), high-RTO pin codes, or first-time customers, an AI voice agent calls to verify the order - confirming name, product, address, and intent to accept delivery. During the same call, it offers a prepaid conversion discount.
Voice verification catches 15-25% of fake or unserious orders before they ship, saving the full shipping cost on each one. The prepaid offer converts an additional 10-20% of genuine COD customers. The combined effect on RTO is substantial.
The key is using a voice agent with pre-built ecommerce workflows, not a generic phone bot you have to program yourself. Platforms like BotSpace offer AI voice agents with ready-made COD verification and conversion campaigns that deploy in minutes.
Require a small upfront payment (₹49-99) at checkout, with the balance collected on delivery. This filters out impulse and fraudulent orders, anyone willing to pay ₹99 upfront genuinely intends to accept the delivery. Sellers report delivery success jumping to nearly 99% with this approach, though total order volume may dip slightly.
Orders typically take 3-7 days to reach the customer. A lot can change in that time, they might find the product elsewhere, forget they ordered it, or simply lose interest. Proactive communication during transit keeps the customer invested in receiving their order.
Send automated updates at every milestone: order confirmed, dispatched, in-transit, out for delivery. Use WhatsApp for the highest visibility (98% open rate) - not just email. Include the product name and image in the message to remind them what they're waiting for.
The "out for delivery" notification is the most critical one. Send it the morning of the delivery day with the expected time window. This ensures the customer is available and expecting the package, reducing "customer not available" NDRs significantly.
Customers offered evening delivery windows (6-9 PM) show 47-53% lower RTO rates compared to standard daytime delivery. The reason is simple, most people are at work during the day. If the courier attempts delivery at 2 PM and nobody's home, that becomes an NDR and eventually an RTO.
Not all courier partners support time slot delivery, and it may cost ₹15-20 extra per order. But that's a fraction of the ₹180-240 RTO cost. If your shipping partner supports it, enable it, especially for COD orders in urban areas.
Show an estimated delivery date on the product page and at checkout. Orders that arrive later than expected have significantly higher refusal rates particularly for gifts, events, or time-sensitive purchases. Being honest about timelines (even if they're not the fastest) reduces disappointment at the doorstep.
When a delivery attempt fails, you typically have 24-48 hours before the order enters RTO. This window is short and critical. Most brands do nothing during this time and lose the order by default. The brands with the lowest RTO rates treat NDR (Non-Delivery Report) as a recoverable event, not a foregone conclusion.
The moment a delivery attempt fails, trigger a three-step recovery sequence:
Step 1: WhatsApp message (within 30 minutes of NDR): "Hi [Name], we tried to deliver your order but couldn't reach you. Reply with your preferred delivery time or updated address, and we'll reattempt tomorrow."
Step 2: AI voice call (2-4 hours after NDR, if no WhatsApp response): The voice agent calls the customer, confirms their availability, reschedules delivery, or updates the address. A phone call is more urgent than a text, it signals that this is time-sensitive.
Step 3: Final WhatsApp message (12-24 hours after NDR): "Last chance to reschedule your delivery, [Name]. If we don't hear from you by [time], the order will be returned. Reply with a time that works, or switch to prepaid for priority redelivery. [Payment Link]"
This three-step approach recovers 25-35% of orders that would otherwise RTO. The voice call in step 2 is particularly effective because failed deliveries are often due to simple coordination issues (wrong time, missing landmark) that a 30-second phone conversation can resolve.
Not all courier partners perform equally in every region. If the first delivery partner failed, consider rerouting the reattempt to a different courier with better success rates in that pin code. Shipping aggregators provide zone-level performance data that lets you make this call. One D2C brand that rerouted 12% of deliveries to alternate carriers in specific zones saw measurable improvement in delivery success rates.
RTO reduction isn't just about saving today's orders, it's about building patterns that reduce risk on every future order.
Once a customer has received and kept a COD order, their trust barrier drops. Send a WhatsApp message 2-3 days after successful delivery: "Glad you loved your [Product]! On your next order, pay online and get free shipping + ₹150 off." Data shows 64-71% of customers who switch to prepaid after an incentive maintain that preference on subsequent orders.
Some customers repeatedly place COD orders and refuse delivery. Tag them in Shopify and restrict their payment options on future orders. This isn't about punishing customers, it's about protecting your margins from a small percentage of bad actors who cost you disproportionately.
Review your RTO rate by pin code, product category, traffic source, and payment method every month. You'll find patterns that aren't obvious: certain Instagram ad campaigns driving disproportionately high COD rates, specific products with sizing-related returns, or particular courier partners underperforming in certain zones. Fix the pattern, not just the symptom.
If you're starting from a 25-30% RTO rate and want to get below 15%, here's the priority sequence:
Week 1-2: Checkout quick wins (free, immediate impact)
Week 3-4: COD gating + WhatsApp automation
Month 2: Voice verification + NDR recovery
Month 3: Optimization + repeat customer conversion
Expected outcome: 40-50% reduction in RTO rate within 90 days, with the most significant drop in the first 30 days from checkout incentives and COD gating.
The new age of AI-first customer engagement starts here
