How much does 10% RTO actually cost you?
RTO isn't a lost sale — it's a lost sale plus two freight bills. See the real monthly cost of a 10% RTO rate, with category benchmarks from fashion to electronics.
10% RTO sounds small — a 90% success rate. But RTO isn't a discount on your revenue, it's a cost multiplier: you pay to ship the order out, and you pay again to ship it back, for an order that generates ₹0 in revenue. Here's what that actually costs at scale, with real numbers.
What RTO costs — and what it doesn't
A common mistake is charging the full product cost against every RTO'd order. In most cases that overstates the damage: the item comes back to your warehouse and is usually resellable. The real cost has two parts:
- Double freight — you paid forward shipping to send it out, and you pay reverse shipping to get it back, with nothing to show for either leg.
- Damage/resale-loss provision — a share of returned stock comes back damaged, resealed badly, or otherwise unsellable. That share, not the whole batch, is a genuine product-cost loss.
A worked example: 1,000 orders, 10% RTO
That's ₹18,000 every month — roughly ₹2,16,000 a year — from a RTO rate most sellers would describe as "not bad." And this is COGS-neutral: the product cost on those returned units isn't counted twice, because the stock goes back to inventory.
Why "10% RTO" means very different things by category
RTO rates vary dramatically by category and by COD/prepaid mix. A 10% RTO rate is roughly average for health supplements, but well below average for fashion — which changes whether 10% is a number to celebrate or a number to be worried about:
| Category | Typical COD RTO rate |
|---|---|
| Fashion & Apparel | 35% |
| Electronics | 18% |
| Beauty & Personal Care | 20% |
| Health Supplements | 10% |
| National average | 26% |
Midpoints of cited industry ranges, reliable-secondary sourced — see the RTO Loss Calculator's assumptions for full source details.
What to do with this
- Compare your actual RTO rate against your own category's benchmark, not a flat 10%.
- Model the real cost (double freight + damage provision), not full product cost — it changes the number dramatically and it's the more honest figure.
- If COD RTO is the dominant driver, a prepaid-incentive strategy (small discount for prepaid) often pays for itself many times over.