eCommerce Shipping

Optimising Supply Chain: The Role of NDR Management in Reducing RTOs

  Jul 04, 2024  

The eCommerce sector has experienced tremendous growth recently, particularly in Direct-to-Consumer (D2C) businesses, fundamentally altering how consumers interact with brands. 

For eCommerce sellers, the biggest question that they ponder is how to ensure that their products reach customers on time. The journey from sellers’ warehouses to buyers’ doorsteps is often full of challenges. Delivery delays and exceptions occur frequently, leading to customer dissatisfaction and increased costs.

Understanding Delivery Exceptions and RTOs

Delivery exceptions such as stopped shipments, delayed deliveries, incomplete addresses, customers unable to pay the Cash on Delivery (COD) amount, inaccurate addresses, or customers refusing to accept delivery are common challenges. These issues can escalate customer concerns and dissatisfaction. According to a recent KPMG study, return shipments can account for up to 20% of all eCommerce shipments, with this number rising to 40% for COD orders.

Even the most successful eCommerce companies encounter numerous delivery exceptions each month. While these exceptions may seem insignificant individually, they can quickly accumulate, leading to missed deliveries and financial losses.

The Cause-and-Effect Cycle of Delivery Exceptions

The cycle begins with a delivery error, which can escalate into a Non-Delivery Report (NDR). An NDR is generated when a delivery cannot be completed due to various reasons, such as an incorrect address or the recipient being unavailable. If not managed effectively, NDRs can lead to a Return to Origin (RTO), where the shipment is returned to the seller. RTOs represent a significant cost and operational burden for eCommerce businesses, often resulting in preventable losses.

Top 8 Reasons for NDR in eCommerce Which Can Lead to RTO

\The eCommerce sector has seen rapid growth, but with this expansion comes the challenge of managing Non-Delivery Reports (NDRs) and Return to Origin (RTO) incidents. NDRs and RTOs can significantly impact an organisation’s long-term growth and profitability. Understanding the causes of NDRs is crucial to mitigating their effects and improving overall logistics efficiency.

Here are the principal causes of NDRs in eCommerce that can lead to RTOs:

1. Incomplete or Incorrect Addresses

One of the most common reasons for NDRs is incomplete or incorrect delivery addresses. Customers may accidentally or unintentionally enter the wrong delivery address, making it difficult for the delivery personnel to locate the destination. This error often results in failed delivery attempts and subsequent NDRs.

2. Incomplete or Incorrect Customer Contact Information

Similar to incorrect addresses, inaccurate customer contact information can also lead to NDRs. If a customer provides an incorrect phone number, the delivery person may not be able to contact the customer for directions or delivery confirmation. This situation can prevent the completion of the delivery and lead to an NDR.

3. Unavailable or Unreachable Customers

Deliveries can only be considered fulfilled once the customer has received their order. If the delivery person cannot locate the delivery address or if the customer is not available to accept the delivery, the order cannot be completed. The delivery agent may attempt to contact the customer, but the order will be marked as an NDR if the customer is unreachable.

4. Rescheduled Delivery by the Customer

Customers sometimes need to reschedule deliveries due to their inability to make payment at the scheduled time. When a customer reschedules a delivery, the delivery agent must update the delivery status accordingly. If the rescheduled delivery is not promptly managed, this situation can result in an NDR.

5. Customer Refuses Delivery

A customer may refuse delivery if they are dissatisfied with the delivery process or the condition of the product. This refusal is particularly common with Cash-on-delivery (COD) orders. Customers are more likely to cancel or refuse an order when payment has not yet been made, resulting in an NDR.

6. Customer Unable to Make Payment

With COD purchases, customers may need more time to arrange the payment for the delivery. Delays can occur when delivery staff must repeatedly interact with customers to secure the payment. Customers might also cancel the order or reschedule the delivery, leading to an NDR.

7. Customer’s Changing Opinion

One of the many benefits of digital purchasing is the ability for customers to change their minds about their purchases. Customers may forget about their orders until the delivery person contacts them, at which point they might decide to cancel the order. This change of mind often leads to order refusal and an NDR.

8. Falsified Delivery Attempts by Carrier Agents

Fake delivery attempts are among the most problematic causes of NDRs. In these cases, the delivery agent marks the delivery as a failed attempt without actually attempting to deliver the package. Such practices can severely impact customer experience and must be addressed promptly to maintain trust and satisfaction.

Strategies to Manage NDRs and Reduce RTOs

  1. Accurate Data Management: Ensure that customer data is accurate and up-to-date. Implementing robust data validation mechanisms can prevent issues related to incorrect or incomplete addresses.
  2. Customer Communication: Maintain clear and proactive communication with customers. Notify them of delivery schedules and any potential delays to manage expectations and reduce delivery refusals.
  3. Flexible Delivery Options: Offer customers flexible delivery options, including time slots and multiple delivery attempts. This flexibility can significantly reduce the chances of missed deliveries.
  4. COD Management: Implement measures to confirm COD orders, such as pre-delivery confirmation calls or messages. This step ensures that the customer is prepared to receive and pay for the delivery.
  5. Technology Integration: Utilise advanced logistics technology to track shipments in real-time and manage exceptions promptly. Automated systems can quickly identify and address potential delivery issues, minimising the likelihood of NDRs and RTOs.
  6. Training Delivery Personnel: Equip delivery personnel with the necessary training to handle exceptions efficiently. Ensuring they understand the importance of accurate delivery and customer service can help reduce the incidence of NDRs.

The Benefits of Effective NDR Management

NDR management in eCommerce is crucial for D2C businesses aiming to minimise returns and enhance the overall delivery experience. By effectively managing NDRs, sellers can take various actions during the final stage of the shipping process, such as notifying the courier to reattempt delivery, updating the customer’s address or contact information, and following up with customers to ensure successful deliveries.

Reducing eCommerce Returns

Efficient NDR management significantly lowers eCommerce businesses’ Return to Origin (RTO) rate. Sellers can utilise multiple NDR management tools, including automated communication systems, address update flexibility, and IVR, to increase successful delivery rates. These tools help reduce the percentage of returns, saving the business considerable costs.

Enhancing Customer Retention

Keeping customers informed and following up in case of delivery delays improves the customer experience and increases the likelihood of repeat purchases. This enhances brand loyalty and adds significant value to the business.

Increasing Business Profitability

Returns incur additional shipping costs for sellers and result in lost customers. Effective NDR management minimises these losses, thereby boosting profitability.

Reducing Fake Deliveries

Engaging with customers through multiple touchpoints helps monitor and prevent fake delivery attempts. This increases the chances of successful reattempts and reduces the risk of losing customers.

Facilitating Effective Decision-Making

NDRs can arise from various factors, including carrier performance and customer behaviour. Utilising NDR analytics allows businesses to adopt a data-driven approach to these issues, leading to more informed and efficient decision-making.

Saving Cost and Time

Streamlining NDR management enables businesses to save valuable time and costs. Fewer returns and an improved customer experience contribute to increased revenue and reduced losses.

The Bottom Line

The strategic management of Non-Delivery Reports (NDRs) is important for brands and sellers seeking to enhance their delivery success rates. Adopting an advanced logistics and returns management solution incorporating effective NDR management capabilities, businesses can proactively address delivery challenges and mitigate the impact of unsuccessful deliveries on customer satisfaction. 

RapidShyp is one such solution that offers a unique feature for handling undelivered orders. RapidShyp’s NDR management categorises orders based on incorrect addresses or customer unavailability. With RapidShyp, you can also automate the return process, making managing and resolving delivery woes easier.

Pragya Gupta is a content marketer with over 7 years of experience in writing, content strategy, and PR. At RapidShyp, she’s involved in research, editing, and writing for the blogs, reports, shipping encyclopedia and other brand assets.

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