Backorder: Meaning, Causes, and Solutions

In ecommerce, a backorder is an order for an item that is not currently in stock. If a product is out of stock but still available for customer purchase, it is on backorder. Customers purchasing backordered products will have to wait longer to receive the product.

The customer’s wait time depends on where the shortcoming occurs in the supply chain. If the stock shortage stems from the manufacturer, the wait time for the consumer may be substantial, harming customer satisfaction. Accurate inventory management and communication up and down your supply chain can reduce the need for backorders and earn customer loyalty.

Backorders occur for several different reasons:

  • Demand exceeds supply due to seasonal trends, marketing, or emergency
  • Bad weather or other road conditions impede timely transportation
  • Political upheaval in a foreign country (in cases of international imports)
  • Poor planning around lead time from supplier
  • Supplier production/delivery problems

How you handle backorders is important to perceived customer service. Customers are generally happy with backorders provided they know what is going on, so, as with all customer facing matters – communication is key. If you frequently frustrate customers by making them wait and/ or communication is poor, you risk losing that customer and your reputation. With so many ecommerce businesses around, your customers might look to take their business elsewhere.