RTO (return to origin) is an order that was shipped but never delivered, so the courier brings it back to you. The customer refused it, wasn't reachable, or the address didn't work. On cash on delivery you collect nothing, and you still pay for both legs of the trip.
Monthly RTO cost = COD orders × RTO rate × cost per RTO.
Cost per RTO = forward shipping + return shipping + packaging + COD handling fee + damage and write-offs.
- Forward shipping. Paid whether or not the customer accepts the parcel. Shiprocket lists an average of roughly ₹36–45 per shipment depending on plan (sources on our benchmarks page).
- Return shipping. Most couriers charge the RTO leg at or near the forward rate, so freight alone is roughly double.
- Packaging. The box, filler and label are spent; often the packaging can't be reused.
- COD handling fee. Many shipping plans charge a COD fee or a percentage of order value per COD shipment. Check your rate card for whether it applies to returned orders.
- Damage and write-offs. Some returned units come back crushed, opened or past their shelf life and can't be resold.
Two costs don't show on the courier invoice but are real: the ad spend that won the order in the first place, and stock that sits in transit for one to three weeks instead of being sold. That's why the calculator starts at ₹250 per RTO. It's our own default assumption, not an industry figure, so replace it with yours.
Worked example: 1,000 COD orders a month
Assumptions for this example: a 25% COD RTO rate and ₹250 per RTO.
Returned orders1,000 × 25% = 250
Monthly RTO cost250 × ₹250 = ₹62,500
A year at this rate₹7,50,000
Worked example: 5,000 COD orders a month
Same assumptions, five times the volume.
Returned orders5,000 × 25% = 1,250
Monthly RTO cost1,250 × ₹250 = ₹3,12,500
A year at this rate₹37,50,000
Cutting the RTO rate by five points at 5,000 orders a month (25% to 20%) means 250 fewer returns, which is ₹62,500 a month back.
What is a good RTO rate?
There is no audited industry benchmark, so treat any single number with care. What the public figures agree on is the gap between payment types. Shipway reports 26% RTO on COD orders against under 2% on prepaid across its platform (FY2025), and Meesho's IPO filing implies roughly 22–24% of COD orders went undelivered against about 3% of prepaid. By category, vendor estimates put fashion at 25–40% and electronics at 8–18%. Every figure, with its source and what it measures, is on our COD and RTO benchmarks page. The more useful comparison is with yourself: track your COD RTO rate month by month, by pin code and by product.
What a confirmation call costs against that
Many COD returns were never going to be accepted: impulse orders, duplicates, wrong addresses and orders the customer says they never placed. A call before dispatch catches them, so you cancel instead of paying to ship the order both ways. Voxmiro makes that call for you in Hindi, Hinglish or English and tags the order in Shopify. It costs ₹6.40–6.87 per started minute of call, a confirmation usually takes under a minute, unanswered calls are free, and new stores get 30 free minutes. Against ₹250 per avoided return, one prevented RTO pays for dozens of calls.
The calculator above assumes about 70% of customers answer and one billed minute each at ₹6.40 (the 2,499-minute pack), with no monthly fee. See pricing, or read how to reduce RTO on Shopify for the other levers.