What Does Backordered Mean? Understanding Backorders in Ecommerce

Virginia Miller

May 18, 2024

In this article

In the world of ecommerce, managing inventory effectively is crucial for success. One term that often arises in discussions about inventory management is "backordered." If you've ever encountered this term and wondered what it means, you're not alone. In this article, we'll explore the concept of backorders, how they differ from out-of-stock items, their causes and consequences, and strategies for minimizing their impact on your business.

Understanding and Managing Backorders in Ecommerce

What Are Backorders and Why Do They Happen?

A backorder occurs when a customer places an order for a product that is out of stock. The seller accepts the order, but does not have enough inventory to fulfill it right away.

There are a few common reasons why backorders happen:

Unexpected spikes in demand that exceed inventory
Supply chain disruptions that delay restocking
Inaccurate demand forecasting by the seller
Production capacity limitations
Quality control issues with inventory

How Backorders Differ from Out-of-Stock Situations

While both backorders and out-of-stock situations mean the product is currently unavailable, there are some key differences:

Ordering: Customers can still place orders for backordered items, but not for out-of-stock items.
Availability Date: Backorders have an estimated restocking date, while out-of-stock situations have no clear timeline.
Customer Experience: Backorders allow customers to reserve products for when they become available again.

The Impact of Backorders on Sellers and Customers

Backorders can frustrate customers who have to wait for their items. They also create extra work for sellers related to communication, order tracking, refunds, etc. If poorly managed, backorders can:

Increase negative reviews and complaints
Overwhelm customer service teams
Prompt customers to shop with competitors instead

Strategies for Minimizing Backorders

While backorders can't always be avoided, sellers can employ tactics to reduce their likelihood and mitigate issues when they do happen:

Carefully track inventory and monitor sales trends
Carry safety stock for high-demand and long-lead items
Set reorder points to account for restocking times
Collaborate closely with suppliers on production plans
Offer substitute products to fill immediate needs

Turning Backorders into Opportunities

Though inconvenient, backorders also present opportunities for sellers to strengthen trust and loyalty by demonstrating commitment to customers. Tactful, empathetic communication and prompt resolution of issues can go a long way.

While eliminating backorders completely may not be feasible, sellers who approach them strategically and transparently can mitigate many downsides.

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FAQs

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What is a backorder?

A backorder occurs when a customer orders a product that is out of stock. The seller accepts the order but does not have enough inventory to fulfill it immediately.

What causes backorders?

Common causes include unexpected spikes in demand, supply chain disruptions, inaccurate demand forecasting, production capacity issues, and quality problems.

How are backorders different from out-of-stock situations?

Customers can still place orders for backordered items, which have an estimated restocking timeline. Out-of-stock items cannot be purchased and have no clear availability date.

What problems can backorders create?

Backorders can increase negative reviews, overwhelm customer service, and prompt customers to shop with competitors instead.

How can sellers reduce backorders?

Strategies include closely tracking inventory, carrying safety stock, optimizing reorder points, collaborating with suppliers, and offering substitute products.

How can sellers turn backorders into opportunities?

Empathetic, transparent communication and prompt issue resolution can strengthen customer trust and loyalty despite inconveniences.

Is it possible to eliminate all backorders?

Completely avoiding backorders may not be feasible, but a strategic, customer-focused approach can help sellers mitigate downsides.