The blocked-inventory problem

Here is a cost of failed COD orders that no courier invoice shows. When an order is shipped, that unit leaves your sellable stock. If the order fails, the unit spends the delivery attempt, the NDR window and the return journey in boxes and trucks: typically one to three weeks before it is back on a shelf, inspected and sellable again. For part of that time you do not even know it is coming back.

Dead stock during demand. The unit was your sellable inventory. While it toured the country, a genuine buyer may have found it out of stock. For fast-moving SKUs, a unit stuck in RTO transit during a sale weekend is a sale lost, not delayed.

Write-offs on return. Not everything comes back sellable. Packaging crushed, seals broken, shelf life consumed. Food and beauty suffer most, but even apparel returns needing pressing, repacking and re-tagging, each a small cost in labour and materials.

Planning distortion. Stock you cannot see distorts purchasing. GoKwik's 2023 data gives a sense of scale from its own network: interventions that year kept over 16 lakh orders out of the RTO pipeline, which it framed as over 16 lakh products available for sale that would otherwise have been in transit for 20 to 30 days, alongside about ₹130 crore of prevented RTO losses and ₹24 crore of avoided reverse logistics cost. Those are vendor-reported numbers for its own platform, but they illustrate how much working stock a returns pipeline can hold at scale.

Three numbers make the cost concrete. Your average RTO transit time (ship date to back-in-stock date; your aggregator's tracking data gives this). Your units in RTO transit on a typical day (monthly RTO volume × transit days ÷ 30). And your degradation rate (what share of returned units come back unsellable or discounted).

A brand doing 250 RTO units a month at 15 days average transit has about 125 units permanently in limbo. At ₹500 average unit cost, that is over ₹60,000 of stock that exists but cannot be sold, plus whatever share degrades on the journey.

Everything that cuts RTO cuts this too, so the first fix is the rest of this series. Beyond that: build the transit limbo into reorder planning so you neither stockout nor overbuy; inspect and restock returned units fast, because every day in the returns corner is another day out of stock; and for your fastest SKUs, consider whether high-RTO lanes justify holding safety stock specifically to cover the limbo.