What is Backorder? Definition & Examples

What is a Backorder?

Understanding Backorder in E-commerce

Quick Definition

A backorder occurs when a product is temporarily out of stock but can still be purchased, with the understanding that the item will be shipped once inventory becomes available. This strategy allows businesses to continue selling products during supply chain disruptions while providing customers with a commitment to future fulfillment.

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Understanding Backorders in E-commerce

What Exactly is a Backorder?

A backorder represents a sales strategy where customers can purchase products currently unavailable in immediate inventory, with a guaranteed future delivery. Unlike traditional out-of-stock scenarios, backorders maintain the potential sale and customer engagement.

Key Components of Backorder Management

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Inventory Tracking: Real-time monitoring of stock levels and anticipated restocking dates
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Customer Communication: Transparent updates about expected delivery timelines
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Estimated Fulfillment: Providing clear expectations for product availability
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Optional Cancellation: Allowing customers to cancel without penalty if waiting period is too long

Pros and Cons of Backorders

Advantages

✓Prevents complete loss of potential sales
✓Maintains customer interest and engagement
✓Reduces inventory holding costs

Disadvantages

⚠️Potential customer frustration with waiting
⚠️Increased operational complexity
⚠️Risk of order cancellations

Best Practices for Backorder Management

1. Accurate Inventory Prediction

Use predictive analytics to forecast restocking timelines and manage customer expectations.

2. Transparent Communication

Provide clear, upfront information about potential wait times and restocking probabilities.

3. Offer Alternatives

Suggest similar available products or provide estimated restocking dates.

Backorder Optimization Strategies

Advanced e-commerce platforms like Growth Suite can help merchants manage backorders more effectively by providing real-time inventory tracking, automated customer notifications, and personalized engagement strategies during waiting periods.

By implementing sophisticated backorder management, businesses can turn potential lost sales into opportunities for customer retention and future revenue generation.