TL;DR: Backlog represents your entire unfulfilled order history, including all unsatisfied customer orders. Backorders are customers’ orders of out-of-stock item. There can be backorders in your backlog, but stores can choose not to allow backorders on their website. An accurate backlog will help with inventory management. Backorder is a viable sales tactic to rescue lost revenue.
A staggering 55% of eCommerce businesses don’t give attention or importance to their supply chains. Knowing the differences between backlog vs backorders can give you a competitive edge on inventory management for your eCommerce store.
Backlogs and backorders are an inevitable part of running an eCommerce business. Believe it or not, having backorders could actually be a sign of a spike in revenue and growth for your store. Sometimes, it’s actually not always beneficial for an eCommerce store to fulfill every order as soon as possible.
So, if you’re wondering basic questions like: What are the differences between backlog vs backorder? Or how are backlogs created? Even how long to wait for backorder on average? This article breaks down the basics of backlog and backorders for eCommerce and other industries.
What is a backlog?
In eCommerce, a backlog represents the total number of orders a customer sent which haven’t been shipped yet. Usually, it comprises many customers since many customers have given orders for you to ship the product. For instance, a customer orders a particular item on January 24, requesting the order be shipped on January 30. This order becomes part of your backlog from January 24 until January 29.
Ecommerce stores often use many tools in conjunction to track their backlogs accurately:
- Warehouse Management Tools: Fishbowl, Odoo, and Zoho Inventory are examples of warehouse management applications that eCommerce stores utilize to track incoming and outgoing inventory. Most eCommerce hosting services like BigCommerce and Shopify also track your inventory with manual and automatic inputs.
- Order Fulfillment Tools: Your eCommerce store most likely has a native order fulfillment history built in. However, it’s essential to have a dedicated tool to give insights into your order funnel. The simplest way to do this is with Google Sheets integration to your eCommerce store with a tool like Atom8. This lets you note why an order might be unfulfilled and have a bigger picture of your internal operations.
- Integration Tools: A disconnected ecosystem of apps giving different information for orders is detrimental to your backlog tracking. You might want to look into an integration solution like KinCloud or Salesforce to integrate your apps onto one source-of-truth platform.
Backorders are orders placed when an item has zero available inventory. Backorders can be a part of your backlog, but do not assume that your backlog is only composed of backorders!
Stores sometimes encourage backorder purchases, seeing exceptional returns on investment simply by allowing customers to purchase out-of-stock items. However, stores must consider many factors before allowing for backorders.
The app allows your customers to purchase even at 0 inventory.
If you’ve done an excellent job of building an accurate and clear understanding of your backlog, backorders can be a powerful sales tactic to increase your store’s revenue.
Backlog vs. backorder
People tend to confuse the two terms (backlog vs. backorders) because of how similar they are. All eCommerce stores have a backlog: a list of unfulfilled orders. But not all stores support backorders, so their customers cannot buy out-of-stock items
Is Backlog Bad in Ecommerce?
While many see backlog as something negative, it simply represents your total unfulfilled orders. Stores must have a system to accurately track their backlog and ensure their customer’s experiences are up to standard. Optimizing your backlog takes work from every department, so cross-app integration and up-to-date data streams are essential to managing backlogs and inventory in eCommerce.
What are the most common types of backlog in eCommerce?
The three most common reasons for unfulfilled orders in a backlog are:
- Out-of-stock purchases: Items with zero product cannot be shipped and thus contributes to your backlog.
- Pre-orders for upcoming products: Sometimes you have items in your inventory but have yet to release them for shipping. Customers who buy items before the official release are added to your backlog, awaiting future releases.
- Shipping issues: Shipping is a common issue for eCommerce stores everywhere contributing to your backlog. No shipping options or a problem in global shipping could mean your product gets stuck or lost on its way to the customers.
Is BackOrder Bad in Ecommerce?
Having backorders awaiting delivery can be a sign of a successful business. With tools like BackOrder, eCommerce stores like Chilly Dogs can take full advantage of sales seasons by allowing purchases beyond their inventory estimation.
While backorder can be something good, it can also backfire. Backorders can create friction in customer relations without clear and accurate information for customers on expected shipping time. There’s also the risk of the customer’s patience running out before the shipping date and potential cancelation. So, think ahead about your backorder threshold and supply capabilities before implementing backorder for your store.
How long should you wait for a backorder?
The time you should set for your expected ship date depends on various factors. Shipping location, item weight, or transportation can all factor into how long to wait for a backorder to arrive. As an eCommerce store, you should estimate your backorder ETA with the goal of ensuring customer satisfaction and real order fulfillment time. It’s a good benchmark to know that the average backorder time to wait among eCommerce stores is:
- 2-5 days for perishable goods
- 1-2 weeks for electronics & accessories
- 1-2 weeks for apparel
- 2-3 weeks for home furniture
- 3-4 weeks for manufacturing goods (bulk)
- 1-2 months for high-capacity equipment
Understanding Backlog vs Backorder
Whether you run a small or big eCommerce online store, you need to fully understand the differences between backlog vs backorder. A backlog can give you incredible insight into your store’s strengths and weaknesses, so setting up an accurate backlog should be every store owner’s top concern. On the other hand, backorders are a viable sales tactic for some eCommerce stores. Tools like BackOrder for BigCommerce generate additional revenue for many eCommerce stores with a niche feature.