Streamlining Logistics: NDR Warehousing in India

With 60-65% of Indian online orders being cash on delivery and return rates reaching 30%, managing undelivered orders and returns remains a persistent challenge for Indian D2C brands.

When packages don't reach customers, it creates a chain of issues - from inventory lockup to customer dissatisfaction.

Your business faces these daily hurdles

• Rising costs with each failed delivery attempt
• Warehouse space getting blocked by returns
• Time spent tracking and managing undelivered items
• Customer support teams handling delivery queries

NDR (Non-Delivery Report) warehousing helps you handle these challenges better. 

In this guide, you will learn about practical ways to reduce return rates, manage inventory better, and keep customers confident in your brand by solving un-delivered orders.

What is NDR Warehousing?

NDR warehousing refers to specialised storage facilities that manage returned or undelivered products from failed delivery attempts in e-commerce operations. 

They serve as temporary holding spaces for products that couldn't reach their intended recipients, requiring systematic processing and management until they can be redelivered or returned to inventory.

These facilities manage the entire cycle of receiving undelivered items, processing them based on their condition, and preparing them for redelivery or restocking.

While traditional NDR management has focused on warehousing solutions, modern D2C brands are shifting towards AI-powered prevention systems. 

For example, a leading Indian FMCG brand recently reduced their RTO rates by 36.7% and saved ₹1.5 crores by implementing Pragma's intelligent NDR management system that analyses 300+ parameters in real-time right after an order is placed to identify & flag risky orders.

The Growing Need for Efficient Warehousing in India

Image description:
Left Side - "Market Growth"

Graph showing e-commerce growth to $120B by 2025

Two comparison boxes:

  - India: "25-30% NDR rate"

  - Developed Markets: "2-3% NDR rate"

Right Side - "Key Challenges"

Five icons in a circular layout

1. Money Icon: "COD Orders (60-65%)"

2. Return Box: "High Returns (25-30%)"

3. Map Pin: "Complex Addresses"

4. People Icons: "Regional Behavior Differences"

5. Cost Tag: "₹300-400 Extra Per Failed Delivery"

Bottom Section

(Simple comparison bar)

"COD vs Prepaid Returns"

COD: 25-30% return rate

Prepaid: 2-3% return rate

The growth of e-commerce in India has brought NDR warehousing to the forefront of logistics management. With online retail sales expected to reach $163 billion by 2026, the volume of delivery attempts and consequent NDRs has increased substantially. 

The Indian market presents unique challenges

• High Cash on Delivery (COD) preference (60-65% of orders)
• Significant return rates (25-30% for COD orders)
• Complex address systems and delivery locations
• Varied customer behaviour across regions
• Each failed delivery adds ₹300-400 in operational costs

These factors contribute to a higher rate of delivery failures in markets where prepaid orders dominate. 

For instance, while developed markets see NDR rates of 2-3% for prepaid orders, India's COD-heavy market experiences rates as high as 25-30%.

Understanding Non-Delivery Reports (NDR) in Logistics

The e-commerce sector in India faces unique delivery challenges, with NDRs becoming a significant concern for online businesses. 

A Non-Delivery Report is generated when a shipment fails to reach the customer, requiring specific handling and processing procedures.

Common Causes of Delivery Failures in India

Issue Type

Reasons

Customer-Related

Unavailability at the delivery address

Incorrect contact details

Change of mind during delivery

Refusal to accept delivery

Address-Related

Incomplete address information

Missing apartment/house numbers

Incorrect PIN codes

Lack of proper landmarks

Payment-Related

Unable to arrange payment for COD orders

Disagreement over the final amount

Issues with online payment at delivery

The impact of these delivery failures is substantial:

• Return to Origin (RTO) occurs in 40-50% of failed deliveries
• Reverse pick-ups account for 5% of overall shipments
• Social commerce experiences NDR rates of 35-40%

For (D2C) brands, each failed delivery increases shipping expenses and keeps products longer in transit. This leads to unhappy customers and makes stock management more complex.

Small and medium brands face extra pressure because they pay more for each delivery attempt. With limited bargaining power with shipping companies, they cannot afford multiple delivery attempts.

Understanding these patterns helps businesses plan better:

• Peak shopping seasons need extra NDR handling capacity
• Certain product categories show higher failure rates
• Specific geographical areas might need special attention

Challenges in Managing NDR Warehousing

NDR warehouse management presents several interconnected challenges affecting operational efficiency and customer satisfaction. 

Image description: A flow diagram showing:

• Space Box: "Limited storage capacity"
• Cost Counter: "Rising handling expenses"
• Clock Icon: "Delivery time pressures"
• Product Icons: "Mixed category handling"
• Staff Symbol: "Team management needs"

Inventory Pile-Up and Space Constraints

Storage management becomes complex as return volumes increase. NDR warehouses must handle various products to properly maintain inventory and quick retrieval processes.

Physical space limitations affect operations in several ways

• Limited floor space for growing return volumes
• Seasonal variations requiring flexible storage solutions
• Product-specific storage requirements
• Mixed SKU management in shared spaces

The problem is significant when managing different product categories simultaneously. 

For example, electronics might need secure storage areas, while apparel requires different handling procedures. This variation in storage needs often leads to inefficient space utilisation, particularly during peak sale periods when return volumes can shoot up unexpectedly. 

Increased Operational Costs

Managing NDR warehouses involves financial implications that directly impact business profitability. 

The cost structure becomes more complex with each failed delivery attempt.

Direct financial impacts include:

• Storage charges increasing 15-20% per failed delivery
• Multiple delivery attempt expenses
• Additional staffing requirements
• Extended inventory holding costs

Small and medium-sized businesses face particular challenges with cost management. Without the advantage of large volumes, they often struggle with higher per-unit costs and limited negotiating power with logistics partners. 

The cumulative effect of these expenses can impact your margins, especially during high-return periods.

Customer Experience and Brand Reputation Impact

Poor NDR management directly affects customer experience and brand perception. 

Product spending extended periods in NDR facilities creates a ripple effect of customer service issues.

The impact can be observed in multiple ways

• Extended delivery timelines frustrate customers
• Communication gaps during redelivery attempts
• Product condition deterioration during storage
• Delayed refund processing

These issues can impact your customer loyalty and drive negative brand perception. 

Technological Solutions for NDR Warehousing

Role of SaaS in Streamlining Warehousing

Software-as-a-service (SaaS) platforms have changed how NDR warehouses handle returns and failed deliveries. 

For Indian e-commerce companies dealing with high Cash on Delivery (COD) orders, SaaS solutions provide flexibility without requiring large initial investments.

These platforms integrate several functions into a single system:

• Warehouse management across multiple locations
• Real-time inventory tracking for returned items
• Automated documentation and reporting
• Integration with various courier partners

SaaS platforms help optimise three main areas of NDR operations

Return Processing 

A digital system manages the entire return cycle—from authorisation to quality checks and inventory updates. 

It cuts down manual paperwork and speeds up the process of getting items back into stock or marked for disposal.

Resource Management 

The software helps plan staff schedules based on expected return volumes and tracks equipment usage patterns. This information allows warehouse managers to allocate resources more efficiently.

Documentation 

Digital storage of all return-related documents makes it easier to:

• Generate automated reports
• Track compliance requirements
• Maintain audit trails
• Access historical data

Automation and Real-Time Tracking

Automation in NDR warehousing cuts down manual work and improves accuracy. 

They use a combination of technologies to handle returns efficiently

Automated Sorting Systems combine several technologies

• Barcode and RFID scanners for quick identification
• Conveyor systems that route packages automatically
• Smart storage solutions that optimise space usage

Real-time tracking within the warehouse helps you locate items quickly and manage space better by monitoring

• Package movement through different zones
• Worker routes and task completion
• Equipment location and utilisation
• Available storage space

Mobile applications provide you with

1. Digital documentation of deliveries
2. Instant status updates across the system
3. Route suggestions for efficient movement
4. Team communication channels

The automation process follows a structured workflow

First, packages enter the system through scanning and identification. They then move through sorting based on condition and return reason. 

After quality checks, the system updates inventory records and routes items to appropriate locations—either back to stock or marked for disposal.

Data Analytics for Predictive Management

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By analysing patterns in returns and failed deliveries, you become better prepared for future volumes and reduce processing time.

The analytics process works at multiple levels

Operational Analysis Systems track daily activities to measure efficiency and identify bottlenecks. It helps managers adjust staffing and resources as needed.

Pattern Recognition Analytics tools look for trends in

• Return reasons and frequencies
• Geographic distribution of failed deliveries
• Product categories with higher return rates
• Seasonal variations

Customer Behaviour Analysis Understanding why and when customers return items helps improve

• Inventory planning
• Staff scheduling
• Storage space allocation
• Processing workflows

The data comes from various sources within the warehouse

• Order management systems
• Delivery tracking platforms
• Quality control records
• Customer feedback
• Warehouse operations logs

Warehouses use this information to make practical improvements in their operations. 

For example, if data shows higher returns in certain pin codes, they might adjust delivery verification processes for those areas. 

Or if specific product categories show consistent quality issues, they can modify inspection procedures.

Best Practices for Efficient NDR Management

Here are proven practices that help reduce NDR rates and improve operational efficiency.

Image description: A step-by-step guide showing:

• Phone Icon: "Order verification first"
• Calendar: "Flexible delivery scheduling"
• Shield: "Risk check system"
• Box with Checkmark: "Quality control steps"
• Support Icon: "Quick customer response"

Pre-Delivery Verification 

A strong verification system helps prevent delivery failures before they occur. 

It starts with implementing automated calling systems to confirm orders and delivery addresses. 

Send clear order confirmation messages that include complete delivery details and enable address validation through standardisation tools.

For higher-value orders, consider

• OTP verification of contact numbers
• Secondary contact information collection
• Address landmark verification
• Preferred delivery time confirmation

The Panchkula case shows what happens without proper verification—a ₹16,057 dining set order failed delivery, and the refund took from October 2022 to February 2023. 

To avoid such situations, use

• Multi-language calling systems for order confirmation
• Clear SMS/WhatsApp updates with delivery details
• Address verification tools
• OTP checks for high-value orders

Optimised Delivery Scheduling 

Scheduling deliveries around customer availability significantly reduces failed attempts. 

Build a flexible delivery system that lets customers choose their preferred time slots and easily modify them if needed.

Looking at the Ernakulam case, where a promised two-day delivery failed despite the customer being available, you see the need for better scheduling systems

• Let customers pick their delivery slots
• Send reminders 24 hours before delivery
• Offer easy rescheduling options
• Provide alternative delivery locations

With Pragma, you can send pre-configured notifications via preferred channels (WhatsApp, SMS, Email), in real-time to verify contact and address details before dispatch reducing unavailability issues by 15%. 

Risk Assessment & Payment Options 

Understanding delivery risk patterns helps create targeted solutions. 

With Pragma, you can improve your risk assessment by

• Cross-checking customer order history across multiple e-commerce platforms
• Identifying past RTO patterns, cancellations and suspicious behaviour
• Calculating risk scores (e.g., 45/100) for each order based on
  
  1. PIN code validation
  2. Quantity of identical items ordered
  3. Comprehensive order history including delivery status, successful deliveries, cancellations, previous RTOs and overall buying patterns

Go through this data to identify high-risk areas and develop specific handling procedures. 

Implement partial prepayment options for COD orders to reduce cancellation risks.

Smart payment solutions can include

• Small discounts on prepaid orders
• Digital payment options at delivery
• Card/UPI payment on delivery
• Flexible payment splitting options

The Telangana case highlights how Amazon faced issues when a third-party seller disconnected, affecting a sofa delivery. 

To avoid such scenarios set up reliable payment options

• Split payment choices for high-value items
• Digital payment during delivery
• Incentives for prepaid orders using Pragma’s fully customisable message flow

Returns Processing and Quality Control 

Set up dedicated NDR processing centres and return management systems to handle returns efficiently and speed up refund processing. 

Train delivery partners thoroughly on NDR protocols and maintain clear documentation of all return attempts.

From the Panchkula case, we see how poor returns handling led to customer complaints and legal issues. Your NDR warehouse needs

Basic setup:

• Clear storage areas
• Quality checking points
• Proper packaging stations
• Documentation systems

• Standard return tracking
• Quick paperwork processing
• Fast refund systems
• Real-time stock monitoring

Provide Instant and Responsive Customer Support

Looking at the provided cases, we see how poor customer support turns delivery issues into bigger problems. 

Here's how to create support systems that work

• Automated SMS/app notifications at each delivery stage
• Multiple contact channels (direct phone, email, WhatsApp or in-app chat)
• Answer customer queries within 24 hours
• Train support teams on common NDR issues
• Give support teams the authority to make decisions
• Send automatic refund status updates
• Explain any refund delays
• Process refunds faster for failed deliveries

Future Trends in NDR Warehousing

The e-commerce landscape in India is witnessing transformative changes, with projections showing growth to $325 billion by 2030. 

This expansion, coupled with evolving consumer expectations, is driving significant innovations in NDR management and warehousing solutions.

Decentralised Warehousing Networks 

The industry is moving away from traditional centralised warehouses towards a more distributed network. 

Addressing the fundamental challenges of delivery times and local market access.

Brands are establishing multiple smaller warehouses with flexible leases rather than operating from one large hub for

• Quicker adaptation to demand changes
• Better local market understanding
• Improved delivery times
• Reduced transportation costs

AI-Powered Inventory Management 

The future of NDR warehousing relies on detailed analytics to tackle high return rates. 

Companies are implementing predictive algorithms that can identify high-risk packages and optimise delivery sequences. 

These systems analyse historical data to improve delivery success rates.

The key focus areas include

• Predictive risk assessment
• Smart scheduling systems
• Automated sorting mechanisms
• Real-time inventory tracking

Strong Communication Infrastructure 

Following industry leaders like Ecom Express, warehouses are developing integrated communication systems that create direct channels between customers and delivery networks. 

The new infrastructure helps bridge the gap between delivery attempts and successful completions.

Modern communication systems incorporate:

• Multi-language support
• Direct customer engagement channels
• Real-time delivery updates
• Automated status notifications

Payment Innovation and Risk Management 

With current data showing a stark contrast between COD returns (25-30%) and prepaid returns (2-3%), warehouses are integrating sophisticated payment and risk management systems. 

These solutions combine traditional payment methods with modern digital options to reduce return rates.

The focus extends beyond just handling returns to preventing them through better risk assessment and payment flexibility. 

ONDC Integration and Standardisation 

The Open Network for Digital Commerce is driving warehouses to adopt common protocols and shared resources, leading to more efficient operations and better resource utilisation through

• Share delivery networks
• Standardise return processes
• Implement common quality standards

Conclusion 

Managing undelivered orders effectively sets successful online brands apart from others. 

The right practices discussed in the guide help you avoid unnecessary expenses, keep customers informed with delivery updates and resolve their concerns instantly.

For growing your brand, handling orders that don't reach customers is an opportunity to show your reliability and win long-term trust. 

When done right, it strengthens both delivery and customer relationships.

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FAQs (Frequently Asked Questions On NDR Warehousing) 

What is NDR in e-commerce?

NDR (Non-Delivery Report) represents failed delivery attempts in online shopping. It is generated when packages can't reach customers, requiring special warehouse storage and processing solutions.

What is NDR used for?

NDR warehouses process failed deliveries, manage returns, track undelivered items, and coordinate redelivery attempts. They ensure efficient handling of products that couldn't reach their intended recipients.

What is the meaning of delivery status non-delivery?

A non-delivery status indicates that a package couldn't be delivered to its intended recipient due to issues like customer unavailability, incorrect address, or payment problems.