A returned COD order
Cost of goods $18 · restocked
- Revenue counted
- $0
- Courier charge out and back
- − $6.50
- Goods returned to stock (credited)
- $0 net cost
- Cost of this return
- $6.50
Illustrative figures. If the goods were lost or damaged, their cost would be a loss too.
The problem
Where this goes wrong without the right numbers
A return is not just a lost sale
The courier charged you to deliver it and charged again to return it. Without recording both, returns look cheaper than they are.
Goods are written off twice
Charge a returned order’s cost of goods and also never restock the item, and the same stock is counted lost twice.
The same customers return again
Where buyers can refuse at the door, as with cash on delivery, returning costs them nothing. A phone number with past returns is the clearest warning you will get.
How it works
Three steps
Parcels come back
Courier tracking and your own records mark a parcel returned, with a reason you choose.
The books follow the rule
The order’s revenue stops counting. The courier’s charge for the trip stays as a cost of returns. Goods back in stock are credited.
You see the pattern
Return rates by courier and by campaign, and a warning on new orders from customers who have returned before.
What you get
What ProfitIQ does for this
Cost of returns, from real charges
Summed from the courier charges actually recorded on returned parcels, and it says how many returns have no charge yet rather than estimating them.
Restock credit
If the goods go back into stock, the order is credited their cost, capped at the order’s own cost. If they are lost or damaged, the cost stays a loss.
Partial refunds
A partial refund reduces profit by the amount refunded. The sale still counts.
Return-risk warning
When you take a new order, ProfitIQ looks the customer up by phone number and warns you about past returns before you ship.
Return reasons
Record why each parcel came back, so patterns show up by product and by courier.
Campaign-level view
Returns can be reported against the campaign that brought the order, so ad spend is judged after the returns arrive.
FAQ
Common questions
What is RTO?
RTO means return to origin: a parcel the customer refused or could not be reached for, which goes back to the seller. For cash-on-delivery sellers it is one of the biggest hidden costs, and every seller who ships also pays for ordinary returns. See the glossary.
How does ProfitIQ treat the courier charge on a return?
It stays a cost. The parcel really was sent, so the courier’s charge for it is shown separately as the cost of returns rather than being hidden or dropped.
What if a return has no courier charge recorded yet?
It is reported as unpriced. ProfitIQ tells you how many returns have no charge yet instead of filling the gap with an average.
How does the return-risk warning work?
On a new order it looks the customer up by phone number, which identifies a person far better than a name, and shows any returns on file before you ship.
Keep reading
Questions? Ask the team.
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