COD, Prepaid and RTO Rates in India: How to Compare Your Order Mix

How much higher is COD RTO than prepaid?#

COD shipments come back almost nine times as often: about 24.3% against 2.8% for prepaid. These benchmarks come from ProfitBox360 research, 2025 (client data and shopper surveys).

Weighted by shipments, those rates work out to about 16% RTO across all orders.

Measure RTO on shipped orders#

Divide RTO shipments by the orders that actually left your warehouse:

RTO rate = RTO shipments ÷ shipped orders × 100

Give shipments time to reach a final outcome before you count them. Track cancellations before dispatch as their own rate. For every 1,000 COD orders at the ₹850 average, 8.3% is 83 orders, or ₹70,550 of sales, that never ship.

Where COD RTO runs highest#

Watch tier 3 towns and first-time buyers: that's where COD comes back most.

The cost column uses ₹172.50 per RTO shipment, covering forward freight, return freight and handling. The seller pays the return cost.

A tier 3 COD shipment is about twice as likely to come back as a metro one. A repeat buyer's COD order is half as likely to come back as a first-time buyer's. Add checks for those two groups rather than restricting COD everywhere.

Why COD parcels come back#

Confirm orders and contact details first: refusals and unreachable customers cause about three in four COD RTOs. That comes from a ProfitBox360 study of 10,000 COD RTOs in 2025.

Illustrative example: a store ships 1,000 COD orders a month. At 24.3% RTO, that's 243 RTOs, costing ₹41,917.50 at ₹172.50 each.

The remaining 5% had other causes.

What share of Indian orders are COD?#

About 62.5% of orders, but only 53.1% of sales value, because COD baskets are smaller.

The preference figure comes from a ProfitBox360 survey of 10,000 Indian shoppers.

Report the mix by value as well as by count#

Track both shares every month, because a shift towards COD can raise order count while sales value barely moves.

Illustrative example: 1,000 orders at the benchmark mix and order values.

COD share of sales value = ₹5,31,250 ÷ ₹10,00,000 × 100 = 53.1%

Which earns more per order, COD or prepaid?#

Prepaid earns more per shipped order, even after allowing for its bigger basket. RTO is the main reason.

Illustrative example: product and packaging cost 40% of order value, and returned stock can be resold. Every other input is a benchmark from this article:

• Forward shipping: ₹61.50 per shipment
• RTO cost: ₹172.50 per RTO shipment
• COD handling charge: ₹32.45 per delivered COD order, the aggregator minimum of ₹27.50 plus 18% GST (1.8% of ₹850 would fall below that minimum)
• Payment gateway fee: 2.1% of order value, paid on every prepaid shipment

COD order of ₹850:

• If delivered: ₹850 − ₹340 product − ₹61.50 shipping − ₹32.45 COD charge = ₹416.05
• Expected per shipment: 75.7% × ₹416.05 − 24.3% × ₹172.50 = ₹314.95 − ₹41.92 = ₹273.03

Prepaid order of ₹1,250:

• If delivered: ₹1,250 − ₹500 product − ₹61.50 shipping = ₹688.50
• Expected per shipment: 97.2% × ₹688.50 − 2.8% × ₹172.50 − ₹26.25 gateway fee = ₹669.22 − ₹4.83 − ₹26.25 = ₹638.14

As a share of order value, COD keeps 32.1% and prepaid keeps 51.1%. Across 1,000 shipments, that's ₹2,73,030 for COD against ₹6,38,140 for prepaid.

Does a prepaid discount pay for itself?#

Only when you target it. A 5% prepaid discount is typical, and stores that test one see prepaid share rise by about 11.3 percentage points.

Illustrative example: 2,000 orders a month at the benchmark mix, so 750 prepaid and 1,250 COD. A 5% prepaid discount moves 226 COD buyers to prepaid (11.3% of 2,000). Their basket stays at ₹850, and their RTO falls to the prepaid rate.

• Each switched order now pays ₹807.50. Delivered, it keeps ₹807.50 − ₹340 − ₹61.50 = ₹406.
• Expected per shipment: 97.2% × ₹406 − 2.8% × ₹172.50 − ₹16.96 gateway fee = ₹372.84
• Gain per switched order: ₹372.84 − ₹273.03 = ₹99.81. Across 226 orders: ₹22,557.06 a month.

The 750 buyers who already paid online get the discount too. That costs ₹62.50 on each delivered order, or ₹60.75 per shipment (97.2% × ₹62.50). Across 750 orders: ₹45,562.50 a month, ignoring the small fall in gateway fees.

Offered to everyone, the discount loses ₹23,005.44 a month. Offered only to shoppers who pick COD, for example in the order-confirmation message, it gains ₹22,557.06.

FAQ#

Should an Indian D2C brand stop offering COD?#

No, keep it, because about 61% of Indian shoppers prefer to pay on delivery and removing COD cuts demand. Restrict it where RTO runs highest instead, starting with tier 3 pin codes and first-time buyers. Leave COD open for repeat buyers, whose COD orders come back half as often.

How long does COD cash take to reach the brand?#

COD cash reaches the brand about 4.8 days after delivery, on average. Add the delivery time itself, and money from a COD order can take well over a week to arrive. Prepaid money doesn't wait for delivery, so plan stock purchases around your COD share of orders.

Does COD RTO rise during festive sales?#

Yes, COD RTO climbs to about 30.8% during festive sales, against 24.3% across the year. Impulse orders and slower deliveries both push it up. Before big sale days, tighten order confirmation, promise only delivery dates your courier can meet, and watch first-time COD buyers in tier 3 towns most closely.

Who pays for an RTO shipment?#

The seller pays for it. An RTO shipment costs the brand about ₹172.50 in forward freight, return freight and handling. The product usually returns to stock, but that money is gone. At 24.3% COD RTO, it works out to about ₹41.92 for every COD order you ship, delivered or not.

Can prepaid orders also come back as RTO?#

Yes, about 2.8% of prepaid shipments come back to the seller. The brand then refunds the customer's payment and still pays both shipping legs. The same address checks and delivery-day reminders that cut COD returns help prepaid orders too, so apply them to every shipment rather than to COD alone.