COD makes Indian shoppers comfortable buying, so it drives order volume. But every COD order carries the risk of RTO — Return To Origin — where the parcel is refused or undelivered and shipped back to you.
On an RTO order you earn zero revenue but still pay forward and reverse shipping, packaging, and usually the ad spend that acquired the order.
A 25% RTO rate means one in four parcels earns nothing yet costs you real money both ways. Those losses must be recovered from your delivered orders, which lowers your effective margin far more than most sellers expect.
Split orders into delivered and RTO. Delivered orders carry normal costs plus the COD collection fee. RTO orders carry reverse logistics, packaging and the wasted ad spend. Total profit is delivered profit minus total RTO loss.
Track RTO by pincode and product. A product with great gross margin can still lose money once RTO is included.
It varies widely by category, price and pincode mix — often 15–40% for COD fashion. Use your own data.