Imagine that your products are flying off the shelves so fast, you can barely keep up with the demand. What do you do? Stop selling and leave your customers hanging? No way! That would just push those loyal customers straight into your competitors’ arms, and you’d be kissing them goodbye. To keep that from happening, just use something called backorder, which also is called a company’s backlog
A backorder occurs when an item or service can’t be fulfilled at the moment due to a shortage in supply. The product might not be available in the company’s inventory but could still be in production, or the company might need to produce more to meet demand.
Straight to the Point: What Is Backorder?
So what is backorder? A backorder, aka a backlog, occurs when a company cannot immediately fulfill a customer’s order due to insufficient stock. This situation arises when demand exceeds the current supply. Though the product may not be available in inventory, it could still be in production or awaiting replenishment. The greater the number of items on the backorder, the stronger the indication of its popularity.
Companies can continue to take orders for out-of-stock items, relying on backorders to maintain sales momentum. Operating with backorders allows businesses to keep customers engaged, increase demand, and add perceived value to their products.
While a manageable backorder count with short fulfillment times is a good sign, long delays and extensive backlogs could signal potential inventory management issues. Backorders, therefore, play a critical role in assessing how efficiently a company handles its supply chain.
Backorder vs Out of Stock: Are They Really The Same?
What is BackOrder vs Out of Stock? When an item is marked as “out of stock” on a website, customers cannot place an order for it. In contrast, backordered items remain available for purchase, even though they are temporarily unavailable.
While both situations involve unavailable stock, backordered products come with the promise of future availability and delivery, whereas out-of-stock items do not guarantee a return. Backorders typically involve extended shipping times but ensure that customers eventually receive their products once they are restocked.
Choosing whether to list a product as backordered or out of stock depends on your business strategy. Consider whether your customers are willing to wait for delayed delivery, and ensure you have efficient systems to manage and track backorders. Understanding how backordered items impact your inventory management is crucial since it can affect stock planning, customer satisfaction, and overall supply chain efficiency.
Pros and Cons of Accepting Backorders
What is BackOrder’s pros and cons? This approach offers both advantages and challenges:
Pros
- Guaranteed demand: Backorders provide a clear forecast of future demand, giving businesses valuable insight into what will sell.
- Customer contacts: With each order, businesses gain customer information, enabling direct communication for updates and future marketing efforts.
- Prepayment: Accepting payment upfront improves cash flow, allowing companies to fund production and distribution more smoothly.
- Growth potential: Having orders in place helps justify increased production runs, which can drive growth and help meet revenue targets.
- Market insights: Backorders reveal customer preferences, including popular product variations, such as sizes and colors.
Cons
- Cancellations: The longer customers wait, the more likely they are to cancel their orders, especially if their needs change or the purchase was impulsive.
- Payment processing issues: If a customer’s payment method expires before shipping, it can complicate order fulfillment and lead to canceled orders.
- Customer service challenges: Extended waiting periods can increase the likelihood of issues requiring customer support, which can strain resources.
Tips to Ease the Backorder Application to Your Business and Customers
Now you have solved the query “what is backorder?” Handling backorders well can make a big difference in boosting customer satisfaction. While there are many strategies to soften the impact, clear communication stands above the rest. Here are three ways to keep your customers happy while they wait.
Set Expectations Early
Make it clear on your website which items are on backorder and provide an estimated shipping time if possible. This transparency helps avoid disappointment. After the purchase, follow up with an email explaining the situation, and keep customers informed about when their product is expected to ship. Proactive communication helps build trust and prevents surprises.
Build Excitement
To reduce the risk of order cancellations, keep customers engaged while they wait. Use automated emails to highlight the features of the backordered product or suggest related items. What’s more, create anticipation by counting down to the shipping date, making the waiting period feel exciting rather than frustrating.
Stay in Touch Throughout the Process
Regular updates are key. Keep your customers informed about the status of their order, even if there are further delays. Transparency builds trust. Consider sharing stock updates on your product page or social media. This consistent communication ensures customers feel connected and reassured that their order is on the way.
How Can BackOrder by GritGlobal Help?
BigCommerce BackOrder by GritGlobal offers an efficient solution for managing out-of-stock items on BigCommerce platforms. It allows businesses to continue selling products even when inventory is temporarily unavailable. Here’s how it helps:
- Enable backorders easily: The app allows store owners to keep products available for purchase while they’re out of stock. Customers can place orders, and the products will be delivered once they’re restocked.
- Automatic stock updates: It automates the restocking process, ensuring that backordered items are processed quickly when inventory is replenished.
- Customizable product pages: Merchants can tailor their product pages to communicate the backorder status clearly, helping customers know when to expect the product.
- Customer notifications: The app helps control customer expectations by sending timely updates about the status of their orders and when they can expect to receive the product.
- Revenue recovery: By enabling backorders, businesses can reduce lost sales due to stockouts, maximizing revenue even when inventory is limited.
- Minimizing financial risks: The enhanced tracking features reduce the chances of miscommunication between your team and suppliers, ensuring that payments, deliveries, and inventory align perfectly. This minimizes financial risks and boosts overall operational efficiency.
Conclusion
Now you should know what is backorder. Enabling customers to place backorders can help boost your sales. With a dependable inventory tracking system and clear communication, it’s an excellent way to keep customers satisfied while driving profits. Reach out to us today to learn more about our backorder solution!
