For Indian D2C brands with a high share of cash on delivery, RTO rates of 10–25% are common and costly: the seller pays forward and reverse shipping and earns nothing. COD confirmation calls or WhatsApp messages, address checks and prepaid incentives are the standard defences.
Formula
RTO rate = Orders returned undelivered ÷ Orders shipped × 100
The minimum ROAS and maximum CAC your unit economics can afford, with a full contribution margin waterfall.
Related terms
- Contribution margin (CM1, CM2, CM3)Contribution margin is the revenue left from a sale after the variable costs of making and delivering it.
- Unit economicsUnit economics describes the revenue and costs of a single unit of a business, such as one order or one customer.
Part of the growth marketing glossary by Shiva Sharma.