What is a Backorder? Meaning, Causes, And Prevention
Backorders are customer orders that are not fulfilled due to inventory shortages. Generally, a backorder is the group or list of unfulfilled orders until the company is prepared to deliver them. This means someone can order an item but will receive it at a future date when it’s in stock or available.
You should handle backorders correctly to ensure efficient eCommerce fulfillment. You can do this by yourself or hire a third-party logistics (3PL warehouse) service to help you ensure everything is in order.
What Exactly Are Backorders?
Backorder Vs Out of Stock
Backorder and out-of-stock are two completely different things. Buyers can’t place orders on items marked ‘Out of Stock’ on an eCommerce site because the products lack an inventory and resupply date. It is different for backorder items because buyers can still place an order, but they will have to wait for the product to be restocked. Backordered items have an exact resupply date. Both of them can affect eCommerce fulfillment.
What Does Available on Backorder Mean
Available on backorder means a particular item is not in stock at a specific store at the moment, but you can still order it, and they will order the product from the supplier. In simple terms, the eCommerce store might be out of stock, but the product is on the way. Always keep your buyers posted to avoid impacting your eCommerce fulfillment negatively.
How Long Does Backorder Take?
The length of a backorder may depend on several factors, including supply, demand, inventory cycle, bulk shipping issues, and manufacturing inventory problems. This means such orders can be processed somewhere between one week from ordering to several months.
Back-To-Back Order Meaning
This is the process of bringing up a purchase order for items to a supplier because of the sales order demand with any stock ordered or buying orders raised in the process assigned to the sales. Compared to direct ordering, where a specific supplier may send items to the customer directly on your behalf, back-to-back is meant to manage items you don’t intend to stock but want to bring and send to customers as needed.
Backorder Vs Pre-Order
Backorder and pre-order are two different things. Pre-order is meant for items that are yet to be released but will be available in the future or after a specific period. These could be newly launched items that have already been announced but are yet to be released for sale.
On the other hand, backorder is for items once in stock, currently unavailable but will be back in stock in the future. [/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
What Causes Backorders?
[/vc_column_text][vc_single_image image=”5319″ img_size=”large”][vc_column_text]Several issues cause backorders in the Canadian order fulfillment process. Some are preventable, while others might be out of your control. They include:
Supply Chain Issues
Supply chain challenges like raw material shortages and factory shutdowns can make items run out of stock unexpectedly. This has been a common scenario during the COVID-19 pandemic, where most companies were forced to shut down. The shipping world has also experienced major challenges because of the restrictions and stalls in different services.
Discrepancies in WMS Systems
Warehouse management covers all the procedures in daily warehouse operations. There are a lot of activities involved in warehouse operations. An error in the inventory management system may give you inaccurate data, or a data entry breakdown can result in the misplacement or miscounting of stock, affecting the order fulfillment process in your store.
Failure to update the inventory can make you run out of stock before replenishing it. This is one of the leading causes of backorders in the eCommerce order fulfillment process. A 3PL warehouse) service can help you minimize such discrepancies through proper inventory management.
Low Safety Stock
Most stores keep additional items on hand in case of supply chain failure or an emergency. This is what is referred to as safety stock. Failure to record or prepare the safety stock of a specific product correctly may result in backorders because of minimal stock levels that can’t handle regular demand. 3PL warehouse providers help you keep track of your stock to ensure you have enough.
High Demand
An irregular rise in demand or traffic to a particular eCommerce store can result in backorders. This could be a result of a specific season like the Holiday Shopping Season in Canada, a TV appearance (e.g., Dragons’ Den), or a celebrity mention.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
How to Minimize Backorders
[/vc_column_text][vc_single_image image=”5321″ img_size=”large”][vc_column_text]There are several measures you can take to control backorders and meet your order fulfillment needs. They include:
Get More Suppliers
Dealing with multiple suppliers is beneficial because you can have reliable backups if your primary manufacturer cannot produce on time. You can also look for a 3PL warehouse for your eCommerce fulfillment needs.
They will help you achieve a lot because they have the right infrastructure and tools for automating retail order fulfillment. Amazon FBA (Fulfillment by Amazon) is another excellent alternative to an eCommerce 3PL warehouse if you outsource order fulfillment.
Have Safety Stock
Ecommerce owners should monitor their stock products in real-time using an inventory management system to avoid letting their customers down. Setting a safety stock point enough to handle unexpected supplier or demand issues will help you predict sales and demand orders.
Having safety stock in place with real-time inventory monitoring and dedicated inventory restoration will minimize the chances of exhausting any given stock-keeping unit (SKU).
Monitor Inventory Levels of Items on High Demand Regularly
Popular items or those in high demand usually sell out fast. You should always monitor their stock levels. Not everything will always go according to plan. Make sure you keep an eye on the inventory to make the right purchase order decisions and meet your eCommerce fulfillment needs. This is something a 3PL warehouse provider can do on your behalf effectively.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
Get in Touch
[/vc_column_text][vc_column_text]Worry no more if you find yourself too busy to handle all this, as we are here to make it simple for you. With our proven eCommerce fulfillment services and latest inventory tools, we can help you keep track of stock levels, safety stocks, and critical data to get insights into your business model.
Our 3PL warehouse services will help you keep your inventory well-optimized, ship your orders on time, and deliver a premium customer experience. Trust us to meet your order fulfillment needs.
