Understanding NDR and RTO: A Complete Guide

Sanidhya Negi / October 21, 2024

Even the most successful e-commerce businesses face delivery issues regularly, which can lead to frustrating losses. These issues, known as delivery exceptions, often escalate into failed deliveries. Delays or stuck shipments can cause customers to lose interest, making them more likely to cancel orders.

When a delivery exception turns into an NDR (Non-Delivery Report), the risk of it becoming an RTO (Return to Origin) increases, leading to unnecessary losses for your business. However, these losses can be prevented with proper management. 

In this blog, let’s explore how handling NDRs in logistics can minimize RTO and protect your profits.

Meaning of NDR and RTO in Logistics

Before proceeding further, let’s understand the terms NDR and RTO. These two are important terms, often used in e-commerce logistics. NDR, full form Non-Delivery Report, refers to a notification from a courier partner to a business, indicating that the delivery has failed. This report includes reasons for failed attempts and any related details. This report includes the reasons for the failed attempt and any related details. After receiving the NDR, multiple delivery attempts are made to ensure the package reaches the customer.

If the order is canceled or cannot be delivered after several tries, it is marked as RTO, meaning Return to Origin. RTO in logistics refers to sending the undelivered item back to the original warehouse, where it can be restocked and sold again. Managing RTO and NDR efficiently is crucial for maintaining smooth operations and minimizing delivery failures.

Main Causes of NDR in E-commerce Logistics

Understanding the main causes behind an NDR in logistics is essential for reducing failed deliveries and improving customer satisfaction. Here are some of the most common reasons for NDR shipment issues and how they affect e-commerce or any business’s logistics:

Incorrect Customer Address: One major cause of NDR in courier services is when customers mistakenly provide an incorrect address. This makes it impossible for delivery agents to locate the destination which results in a non-delivery report. 

Wrong Contact Number: If a customer provides an inaccurate phone number, delivery agents may not be able to confirm the delivery details or location which leads to a failed attempt. 

Customer Requests a Rescheduled Delivery: Sometimes, customers are unable to accept deliveries on the scheduled date and request a different time. When customers communicate this, delivery agents can reschedule, but this situation can still cause delays and NDR in logistics.

Customer Not Available for Delivery: Your customer may not be present at the delivery location and fail to provide alternate instructions. In such instances, delivery agents cannot complete the order, resulting in an NDR report for that shipment.

Customer Refuses To Accept the Order: In some cases, customers may change their mind about a purchase and refuse to accept the delivery. This rejection triggers an NDR in courier operations, and the product is typically returned to the seller.

Fake Delivery Attempts: In rare cases, delivery agents might claim they attempted a delivery when they didn’t, causing a false NDR to be generated. This negatively impacts both customer trust and the efficiency of logistics operations.

Minimizing RTO Through Proper NDR Management

Managing NDRs effectively can significantly reduce the occurrence of Return to Origin (RTO) shipments, which can save both time and money for all type of businesses. Here’s how proper NDR management can minimize RTO NDR issues and improve the overall logistics process:

Determine the Reason Behind NDR: The first step in managing an NDR in courier operations is identifying the root cause of the failed delivery. Whether the problem is related to a wrong address or the customer not being present, knowing why the NDR shipment occurred helps in planning the next steps for a successful delivery.

Notify the Courier Partner: Any relevant information gathered from the customer should be promptly shared with the courier service. This helps the delivery agent to be better prepared and informed for the next attempt, increasing the chances of success and minimizing RTO NDR instances.

Attempt the Delivery Again: By using the accurate data from the customer, the courier partner can make a second attempt to deliver the NDR shipment. Improved communication between the business, customer, and courier ensures a smoother process by reducing the possibility of another failed delivery.

Consistent Follow-up: In cases where the second delivery attempt also fails, it’s important to immediately follow up with the customer. This ensures that the next delivery can be properly arranged, thereby preventing the NDR from escalating into a costly RTO NDR situation.

How NDR Management Software Helps Reduce RTOs

Having a well-organized NDR management process is just the first step in cutting down Return to Origin (RTO) rates. An effective solution is an NDR management software system, which automates and improves your workflow and helps you manage NDRs efficiently and reduce RTO percentages. 

Streamline Communication Processes: Managing NDRs involves reaching out to customers and sharing that information with courier partners. The software automates these communications, saving time and ensuring accuracy, so everyone is informed faster and more reliably.

Receive Real-Time NDR Updates: Traditional systems only provide NDR updates at the end of the day which causes delays in resolving issues. With NDR management software, you receive updates immediately after the courier partner is notified which enables you to act quickly and efficiently.

Collect Data on Delivery Exceptions: The software helps gather data on different types of delivery failures over time. By analyzing this data, you can identify patterns and implement strategies to prevent future delivery failures.

How NDR and RTO Affect Your Business Profitability?

When a non-delivery report (NDR) happens, it can quickly lead to lost sales. A failed delivery attempt might frustrate the customer enough to cancel the order altogether. Even if they don’t cancel right away, the order may still never get delivered if the same delivery mistakes are repeated without gathering new information.

When multiple attempts fail, the order turns into an RTO. At this point, you’re not only losing the sale but also the cost of shipping. Worse, if something goes wrong during the return trip to your warehouse, you could lose the product itself. This leads to triple loss, lost sale, wasted shipping, and product damage.

To avoid these unnecessary losses, it’s best to manage NDRs right from the start. By resolving delivery issues early, you can stop them from escalating into costly RTOs.

How to Minimize Cancelations and RTOs for e-commerce Orders?

In e-commerce, reducing cancelations and RTO orders is crucial for maintaining profitability and customer satisfaction. Here’s how to reduce cancelations and returns:

Utilize NDR Management Software: Implementing an NDR management system is one of the most effective ways to handle non-delivery reports efficiently.

Quickly Address NDR Causes: The faster you resolve the issue causing the NDR, the better your chances of ensuring a successful delivery on the next attempt.

Act Within 36 Hours: Research shows that you typically have a 36-hour window to fix an NDR issue before customers become more likely to cancel the order.

Automated Cause-Specific Communication: By automating tailored communications with customers based on the specific cause of the NDR, you can speed up the resolution process and improve delivery success rates.

Reduce Return Rates: Addressing NDRs promptly and effectively increases your chances of fulfilling orders, significantly lowering cancelation and return rates.

Conclusion

Managing NDRs effectively is crucial for minimizing RTOs and protecting your business from unnecessary losses. By addressing the causes of delivery failures promptly and ensuring clear communication between customers and courier partners, businesses can significantly reduce the chances of returns. 

Bigship sends timely Non-Delivery Reports (NDR) to sellers or customers which further helps in quick resolution of issues such as incorrect addresses or recipient unavailability. This proactive approach minimizes RTOs and ensures smoother, more successful deliveries.

If you want to manage NDRs and reduce RTOs, start shipping through Bigship just by signing up here.