RTO (Return to Origin) is an outbound shipment that fails delivery, for example because of refusal, an unreachable customer or a bad address, and returns to the seller. RTV (Return to Vendor) is stock the marketplace or its warehouse sends back to the seller, such as defective, rejected or unsold units. RTO is a delivery outcome; RTV is an inventory movement.
What RTO (Return to Origin) means
RTO happens when a shipment leaves for the customer but is not delivered, and the courier sends it back to the origin. Typical triggers are customer refusal at the door, repeated failed delivery attempts, an incorrect or incomplete address, a customer who cannot be reached, or a pincode the courier cannot serve.
The key point is that the customer never accepted the parcel. In most cases the order is cancelled or closed as undelivered, and the sale should not remain as revenue in your books. Cash-on-delivery orders are especially exposed to this, but prepaid orders can also end in RTO.
What RTV (Return to Vendor) means
RTV is the movement of goods from the marketplace, its warehouse or its fulfilment partner back to you, the vendor or seller. Reasons commonly include customer returns that failed quality checks, damaged or defective units, wrong or non-sellable items, expired or slow-moving stock, and inventory the marketplace is no longer willing to hold.
Here the customer may well have received and accepted the product earlier. RTV is about what happens to the inventory afterwards, not about a failed delivery.
One caution: usage varies. Some marketplaces use RTV for any return that physically comes back to the seller, and some use it only for specific flows. Always read the definition in your seller agreement, returns policy and settlement report headers.
RTO vs RTV: side-by-side comparison
| Point | RTO | RTV |
|---|---|---|
| Full form | Return to Origin | Return to Vendor |
| What it is | Failed forward delivery | Inventory sent back to the seller |
| Customer received the item? | No | Often yes, or the item never sold |
| Who triggers it | Courier or logistics outcome, customer refusal | Marketplace or warehouse decision, QC outcome |
| Typical cause | Refusal, address issue, unreachable customer | Defect, damage, QC failure, non-sellable stock |
| Main risk for you | Shipping charges and lost sale | Stock condition, missing units, disputed deductions |
How each affects your settlements
Both events change what the marketplace pays you, but through different lines in the settlement report. Exact treatment depends on your agreement, so confirm the following in your rate card and terms rather than assuming:
- Whether commission is reversed on an RTO or retained in full or in part.
- Which shipping or reverse-logistics fees apply to RTO and to RTV.
- Whether any return-handling or processing fee is charged on RTV.
- The time window within which you must raise a dispute.
- How GST and TCS are treated on reversals. Check with your tax adviser and the latest rules; do not rely on old invoices.
Money typically leaks in three places: fees charged on an order that should have been fully reversed, units marked as returned that never physically reached your warehouse, and RTV stock received in worse condition or lower quantity than the marketplace recorded.
How to track RTO and RTV properly
- Tag every return by type. Keep separate categories for RTO, customer return, and RTV so they are not merged in one returns number.
- Match to the original order. Link each return to the order ID, the sale line and the settlement line.
- Verify physical receipt. Compare courier or marketplace return records with your goods-received entries, and note quantity and condition.
- Check fees against agreed terms. Compare charges in the settlement report with your rate card for that category and period.
- Log disputes with evidence. Keep unboxing photos, AWB numbers, GRN records and the dispute ticket reference, and track the claim until it is credited or closed.
Doing this by hand across large Excel settlement files gets slow. MarketplaceMetrics by Fundle reconciles sales and settlements, checks commissions and fees against agreed terms, and tracks returns and recovery cases. Myntra Excel reports are reviewed today, and other marketplaces are in scope discussion.
Common mistakes brands make
- Treating all returns as one number. An RTO rate and a post-delivery return rate point to different fixes, such as address verification and COD policy versus product quality and sizing.
- Assuming terminology is uniform. One marketplace's RTV may be another's customer return, so map each report's labels before comparing.
- Missing dispute windows. Recovery claims often have deadlines, so review settlements regularly rather than quarterly.
- Ignoring stock-side checks. A returned unit that is not received and re-graded is a loss even if the money side looks correct.
Worked example
Illustrative example only. All figures are assumed for explanation and are not real marketplace rates.
Order A (RTO): a prepaid order of ₹1,499 is refused at the door and returns to your warehouse. Suppose the settlement report shows a forward shipping fee of ₹70 and a reverse shipping fee of ₹60 (assumed). The sale should net to zero, so your reconciliation should show the ₹1,499 reversed and only the fees your agreement allows. If commission of ₹225 (assumed) is still deducted but your terms say it should be reversed, that ₹225 is a recovery claim.
Order B (RTV): a unit sold earlier is returned by the customer, fails QC at the marketplace warehouse and is sent back to you as RTV. The marketplace records 10 units sent back in a batch. You receive 8 and 1 is damaged. At an assumed cost of ₹600 per unit, the 2 units short or damaged represent ₹1,200 of exposure, which you can raise with the delivery proof, GRN and photos.
The two cases look similar in a returns total, but one is a delivery failure and the other an inventory and quality dispute, so each needs its own checks.
Questions and answers
Is RTV the same as a customer return?
Not always. A customer return is the customer sending back a delivered item. RTV is the marketplace sending stock back to the vendor, which may follow a customer return or QC failure. Some platforms blur the terms, so check the definitions in your seller agreement.
Does RTO apply to prepaid orders or only cash on delivery?
Both. COD orders see more refusals, but prepaid orders can also fail delivery through wrong addresses, unreachable customers or courier issues. Whether the customer is refunded and which fees apply depends on your payment mode and marketplace terms.
Are commissions refunded on RTO and RTV?
It depends on your agreement and category. Some terms reverse commission fully, others partly or not at all. Check your seller agreement, rate card and settlement report for the exact treatment, and confirm the latest terms with the marketplace before raising a claim.
How do I find RTO and RTV charges in a settlement report?
Look for return, reverse logistics, shipping and adjustment lines, then match them to order IDs and AWBs. Column names vary by marketplace, so ask your account manager for a field glossary and compare each charge against your rate card.