Backorders are inevitable in the fast-paced world where everyone wants the products immediately. If your inventory is not managed properly, chances are you face more backorders than you’d like. But what does backordered mean? And if it is so inconvenient, how can you manage these orders so that their occurrence isn’t as frequent? Read on to find out!
What Does Backordered Mean?
It is not uncommon for businesses to run out of stock for a particular product. However, in the case of backorder, a customer can still place the order from the business’s website. Meanwhile, the merchant orders more inventory from the supplier so that the ordered product can be delivered at a later date.
In other words, businesses sell products to customers despite not having them in stock on the promise that they would be delivered as soon as the inventory has been replenished.
In case multiple products are ordered with some items in stock, the available products are packed and shipped immediately, while the backordered iteams are sent after the merchant receives the stock from the supplier.
Difference Between Backorder and Out of Stock
Backorder vs. out-of-stock seem interchangeable, so what seems to be the difference? Well, in the world of e-commerce, there is a considerable difference between the two terms.
While backorder means that a product is temporarily out of stock, it has a resupply date after which the product can be delivered. However, out-of-stock doesn’t have a resupply date, and the seller doesn’t have any estimated date when the inventory could be restored.
So, to sum up, the difference between backorder vs. out of stock is if a product listing says “product currently unavailable,” the seller doesn’t know when it could come back in stock. However, if the listing says, “ the product can be delivered in X business days,” that means it is a backorder, and the inventory has run out, but the seller has placed an order with the supplier.
Causes of a Backorder
Now that you know what backordered means, let’s look at what causes it.
High Product Demand\
When a product goes in unusually high demand, you might experience backorders. Typically, this may result from a particular social media trend or a seasonal rush. In this case, products can run out of stock before you even have the chance to unlist them from your website or have time to place orders for fresh inventory from the supplier for the backordered items You should know how to manage customer orders for such an issue.You should keeo your customers informed regarding such backordered items.
Longer Lead Times
Longer lead times from the manufacturer or supplier’s end can cause backordered items. In most cases, this may be a result of a supply chain crisis. To overcome this issue, businesses make use of their safety stock, and when even that is all burned out, backorders are the only option left till the inventory can be replenished by the manufacturer/supplier.
Human Errors in Inventory Management
Human errors can often cause backordered items. If you miscount the items available in the inventory, fail to keep a safety stock, or simply forget to order new stock, you will be faced with backorders before you know it.
How to Manage Backorders?
While backorders or backordered items aren’t part of the plan, they can sometimes be inevitable. Fortunately, there are ways to minimize them. Here are some tips that might help you out:
Keep Safety Stocks Based on Forecasted Demands
Having an advanced inventory management system that keeps track of your inventory stock in real-time is essential. Moreover, you can keep a high safety stock by forecasting demands that might go unusually high during particular seasons. This way, all customer demands can be met without delays.
Work with Multiple Suppliers
One of the biggest mistakes e-commerce businesses make is working with only one supplier. And when they have manufacturing or supply chain issues, you’re left with several backorders. However, working with more than one supplier allows you to maintain your stock levels even if one supplier cannot provide, thus minimizing backorders.
Keep a Check on the Inventory
No matter how much you plan; things won’t always go accordingly. That’s why keeping a close eye on your inventory is important, particularly on products that sell fast. If you spot low stock levels, place an order with the supplier immediately to prevent a backorder.
The Bottom Line- what does backoredered mean
What does backordered mean or what are backordered items ? To temporarily run out of stock, but the items can be delivered at a later date as soon as the inventory has been restored. It is different from a product being out of stock indefinitely. However, at the same time, you mustn’t lose customers because of a backorder.
If you’re ever faced with a backorder, be sure to notify your customers and provide them with a manageable ETA. And don’t forget to follow the management tips mentioned above to ensure the occurrence of backorders is as rare as possible.
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