Operations
RTO and return loss calculator
RTO is the cost most sellers know about and almost none of them have counted. This works out what a single undelivered parcel costs you once shipping, packaging and damaged stock are added up, then shows what that does to a month.
Your month
Never delivered, came straight back.
Delivered, then sent back.
What it costs to send one parcel out.
What it costs to get it back.
Lost every time, a returned parcel is never repacked.
After fees and ads. The profit calculators work this out.
Damaged, opened, missing tags, wrong item returned.
₹48,600
What RTO and returns cost you this month
₹225
Cost of one RTO
₹270
Cost of one return
51%
Of your gross profit, gone
₹96,000
Profit if nothing came back
₹47,400
Profit you actually keep
₹47.40
Real profit per order placed
You think you make ₹120 an order. Once 120 parcels come back undelivered and 80 come back from customers, you make ₹47.40 across every order you shipped. That is ₹5,83,200 a year at this rate.
Where the loss comes from
RTO, 120 parcels
Shipping out and back, packaging, and stock that comes back damaged.
-₹27,000
Customer returns, 80 parcels
Same movement, plus a higher chance the unit cannot be resold.
-₹21,600
Total drag on the month
-₹48,600
Cutting the RTO rate by two points is worth ₹4,500 a month here, which is usually easier than finding the same money in price or in supplier cost.
How this works
- An RTO costs you the parcel going out, the parcel coming back, the packaging, and whatever share of the stock returns in a state you cannot sell.
- A customer return costs the same movement but carries a higher chance the unit is no longer sellable, because it has been opened and handled.
- Both are spread across every order you shipped, which is what turns a healthy looking per order profit into the number you actually bank.
- The break even failure rate is the point where failed deliveries cost more than delivered orders earn. It is usually far lower than sellers expect.
- Packaging is counted as lost every single time, because a returned parcel is never repacked and resold in the same box.
Questions sellers ask
What counts as RTO and what counts as a return?
RTO is a parcel that never reached the customer, usually because they refused it, were unreachable, or the address failed. A return is a parcel that was delivered and then sent back. RTO tends to be cheaper per unit because the product is often still sealed, which is why they are counted separately here.
What is a normal RTO rate in India?
Prepaid orders often sit between two and six percent. Cash on delivery is a different animal and commonly runs fifteen to thirty percent, sometimes higher in fashion at low price points. If you are mostly COD and your rate is under ten percent, you are doing better than most.
How do I actually reduce RTO?
The reliable levers are address and phone verification before dispatch, a confirmation call or message on COD orders above a value threshold, blocking or prepaying the pincodes that repeatedly fail, and clearer size and product information so the buyer is less surprised. Discounting prepaid orders is usually cheaper than absorbing COD failures.
Why does the calculator charge me for stock that came back?
Because not all of it can be sold again. Tags come off, packaging gets crushed, and in some categories a returned unit is worth nothing. Twenty percent unsellable is a moderate assumption for most categories and a generous one for fashion.
My RTO rate varies a lot by pincode. Does this help?
It gives you the cost per failure, which is the number you need before you can decide what to do about a bad pincode. Once you know one RTO costs you around two hundred rupees, blocking COD in the worst hundred pincodes stops being a difficult decision.