Backorders are expected to be restocked and delivered to customers by a specific date. Is Backorder Different from Out of Stock?īackorders refer to a kind of out-of-stock product, but it's important to note that the definition is slightly different. However, larger backorders and long wait times are often problematic.Įxtensive company backorders can often lead to anger and frustration among customers, particularly when demand remains high. A manageable number of orders and a short turnaround time means the company is doing well. The number of items on backorder, and the time taken to fulfil these orders often provides insights into how well a company can actually manage its inventory. Keeping products on backorder can even assist in boosting demand, increasing customer base potential, and retaining future clients.Ī company's backorders are often an important factor in inventory management analysis. Just because you don't have the products available to send to your customers, doesn't mean you won't have the raw materials, or supply options to fulfil those inventory requests. The higher the number of backordered items, the higher the demand.īackordered products should still be generally available. The nature of your backorder, and the number of items available on backorder will affect the time required before the customer eventually receives the product required. You could also risk losing customers who aren't willing to wait for stock levels to replenish. This could be a good sign initially for your company, but it does mean that you'll need to order more stock to manage sales orders. Backorder Definition: What is a Backorder?Ī backorder is an indication that demand for a product outweighs the supply. Let's take a closer look at the meaning of Backorder. For physical products, you might get backorders for products that you're not holding in your warehouse, but that are still available from suppliers. A backorder is a request for a good or service not currently able to be filled, due to lacking stock levels. Although some words will be more crucial to you than others, it's best to have a basic understanding of the terminology you'll encounter on your journey.īackorder is one of the more common terms that appears for an ecommerce business. Dropshipping, purchase order, safety stock, and carrying costs are all excellent examples.
There are many terms you may come across in the eCommerce landscape when building your new business.
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