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An Important Concept In Trade: Return To Origin (RTO)

Published 17 Mar 2021

An Important Concept In Trade: Return To Origin (RTO)

An Important Concept In Trade: Return To Origin (RTO)


This week’s blog post will help you to have more insight into the RTO concept that we encounter in foreign trade and e-commerce package delivery.


What Means Return To Origin (RTO)?

Return to Origin or RTO is a commonly heard term in the shipping, logistics and e-commerce world. In simple terms, it refers to the non-deliverability or rejection of a package or load and its return to the seller’s address. RTO also appears in international trade. In that case it refers to the return of the imported material to the country of import when it is not suitable for its qualifications.


Returned Goods

Goods exported from the customs territory of the Community can be accepted as returned goods if their re-import was already intended at the time of export, or where re-import was not intended but takes place owing to particular circumstances. If these conditions for the acceptance as returned goods are met, the goods can be released for free circulation under relief from import duty.

The goods in question must originally have been Community goods which became the subject of an actual export - an export that indeed occurred - from the common customs territory, and their re-import must, in principle, take place within a period of three years. Also, the goods must be put into free circulation so that they regain their original customs status.


How Does RTO Influence Logistics?

Logistics and transportation play a significant role in the success and growth of every business. The prime aim of a business’s logistics and transportation is to ensure safe and timely delivery of goods from the warehouse to customer’s address. To ensure the same, there are plenty of processes that need to be performed in a way to bring perfection and accuracy in operations.

Some of these processes include allocating orders intelligently, optimizing and planning routes efficiently, creating and managing trips properly, and providing end-to-end visibility. Just like we missed, many businesses also forget to count “reverse logistics” while considering the important aspects of logistics and transportation.

Reverse logistics is closely related to customer satisfaction. It includes the processes involved in sending the goods from customer’s address to the warehouse or the hub. In simple words, when a customer raises a return request for the product(s) that are either faulty or didn’t meet his/her expectations.


What Distinguishes Reverse Logistics From Traditional Logistics?

Traditional logistics is all about getting a product to market. Information is collected via various automated systems that follow the supply chain. This ranges from product development and manufacturing to distribution and fulfilment. Reverse logistics, on the other hand, describes all processes that lead a product from the recipient back to the manufacturer and the subsequent reprocessing or disposal.


The Lower The RTO Rate, The Better It Is For Your Business

Since huge shipping costs are involved in moving a product from the warehouse to customer’s doorstep, a business has to incur huge losses on return orders. But by adopting a few measures you can reduce the rate of RTO:

1. Real-time tracking

2. On-time delivery

3. Safe delivery

4. Transparency

5. Time-slot selection and other delivery-related preferences

How Can RTO Be Avoided?

One of the best ways to achieve successful reverse logistics is to minimise returns and complaints. To do this, companies need to listen carefully to their customers and take their feedback seriously. Frequent product defects may necessitate changes in the manufacturing process. Shipping damage indicates inadequate packaging. There are also often major discrepancies between a product and its presentation. By taking care of these many small problems, you will quickly be able to reduce the number of return requests.