What Is a Backorder and How to Deal With Them

There’s nothing worse than scouring the web for the perfect product, finding it, and ordering it only to find out that it’s actually on backorder. While you may have experienced this issue from the customer side, what does it mean from the seller’s side? Read on to learn everything you need to know about backorders and how to effectively deal with them to entice and retain customers in the process. 

What Is a Backorder?

A backorder refers to what happens when a customer orders an item that isn’t currently available to be immediately shipped out. Instead, the seller promises to send the item out to them as soon as it’s available. Lots of companies see backorders as a good thing—after all, this means that your products are selling! That said, if not handled correctly, backorders can become a major problem for your business, just like delivery exceptions we wrote about elsewhere.

That’s because customers have come to expect to receive their orders very quickly. Thanks to retail giants like Amazon, two-day shipping has essentially become an industry standard that many smaller retailers struggle to meet, even if products are in stock. 

So what happens if your products are out-of-stock? Obviously, this is going to lengthen your timeline. To avoid it, you should know how to calculate finished goods inventory. That said, some customers will be willing to wait for your amazing products. Just make sure that it’s going to be worth their while. 

Impacts of Backorders

We’ve mentioned that backorders can be either a good thing or a bad thing. Let’s dive deeper into some of the possible impacts of backorders so that you can fully understand what it means for your business: 

• Backorders can actually increase your products’ value as customers will see it as an in-demand item and want it even more! In fact, this is why some companies operate on backorder intentionally to create hype and demand for their products. 
  
  
• Backorders can help cut down on the space that you need for your inventory. This is a cost-saving measure that can actually help you offer your products for lower prices as a result! Also, check out this post about minimum order quantity.
  
  
• Backorders can lead customers to look elsewhere for a product substitution and can lead to canceled orders and dissatisfied customers if not handled properly. 
  
  
• Backorders can force you to increase your customer service resources in order to deal with backorders and communicate with the customers affected. 

How to Deal With Current Backorders

If you’re already experiencing backorders, there’s nothing you can do to get around it—you have to deal with it. But how can you effectively deal with it without angering or alienating customers? 

Here are some order management tips that you can follow to properly deal with current backorders:

• The first thing that you need to do is update your website with the backorder status and your customer service reps. That way, customers who are currently shopping on your website will see this information and make their purchasing decisions accordingly. 
  
  If you offer amazing products, they will probably be willing to wait. If possible, include a specific date that the product will be available—that way, the customer has a general idea about how long the wait will be and can choose to purchase or not based on that information. 

• The second thing that you need to do is to give your customer options. For example, you can ship out other parts of their order that are immediately available while they wait for the backordered item. You should also offer the customer the option to cancel their order if they want to. 
  
  You can give the customer a consolation offer such as free shipping, free gift wrapping, a future discount, etc. All of these options will make the customer feel like they’re in control and help give them peace of mind. 

• To give the customer peace of mind when dealing with a backorder, don’t process their payment until the order can be shipped out. Not only is it better for the customer, but it could end up better for the seller as well in the event that the order ends up getting canceled—that way, you don’t have to worry about processing a refund. 
  
  
• Finally, constantly stay in contact with the customer throughout the process. Keep them up-to-date on the status of the item, and make sure to keep them in the loop every step of the way. Throughout the process, always offer them the option to cancel if they want—especially if the fulfillment timeframe for the backorder gets pushed out further than expected. Open and honest communication with the customer is the best way to deal with a backorder and leave the customer with a positive experience of the company. 

How to Prevent Future Backorders

Even though we’ve said that there are some positive effects to backorders, you may not want to deal with them. If you’re trying to avoid this issue in the future, here are some ways that you can prevent future backorders: 

• Know your stock levels in real-time so that you can address issues ahead of time. 
  
  
• Know your item velocity so you can predict when you’re going to run out of a product.
  
  
• Increase your stocking capacity in preparation for high-demand times. 
  
  
• Work with multiple suppliers along the way to ensure that you have alternative options available if one supplier encounters supply chain disruptions. 
  
  
• Use technology that takes the guesswork out of it all and can easily keep you informed of stock levels, demand information, and potential issues along the way that can lead to backorders.  

Other Ways to Guarantee Customer Satisfaction in the Meantime

When it comes to the eCommerce sphere, customer satisfaction is everything. With so much competition out there, it’s easy for customers to choose a competitor over you if they aren’t satisfied with their experience. This is why you really need to go all out in terms of creating an incredible buying experience from start to finish—even if a backorder is involved. 

Here are some other ways that you can guarantee customer satisfaction and help counteract the annoyance of a backorder:

• Prioritize customer service. Customers should be able to easily reach you to obtain quick and accurate information about your products and their order. There’s nothing worse than trying to call a company’s helpline and sitting on hold for over an hour. What that tells a customer is that they aren’t important. Instead, make sure that you have enough customer service reps to answer incoming calls. 
  
  You could also offer a live chat customer service option on your website. This really shows that you are ready and available to answer any and all questions that your customers have. 

• Prioritize communication. Another thing that to prioritize when dealing with a backorder is open and honest communication. Make sure that you keep the customer updated on their order every step of the way. 
  
  If for some reason the date of the order gets pushed back even further, make sure that you inform the customer immediately while offering them options: either they can cancel their order, or they can continue to wait, for which you will offer them an incentive like a coupon, a free product, free shipping, etc. When a customer feels that you’re communicating with them, you can build trust which contributes to an overall positive customer experience. 

• Prioritize packaging. After all this, do you really want your customer to receive a plain old brown box in the mail? This will not really excite them—and you want them to be excited! The best way to appeal to your customer is to focus on the unboxing experience by using custom packaging. Custom packaging sends a message that your brand is high-quality and your products are worth buying. 
  
  Companies like BoxGenie offer custom packaging solutions and expertise so that you can easily design your perfect package. You can either use their online design tool to create your custom masterpiece, or you can go off of one of the pre-made designs featured in their design showcase. If you have any questions along the way, BoxGenie has experts standing by ready to help answer them based on the knowledge and expertise they have built, thanks to almost 50 years in the game. 
  
  So before you send out your backordered products in a boring brown box, consider using custom packaging instead if you really want to impress your customers. 

Conclusion

Now you’re more than ready to handle backorders effectively and efficiently! Just remember to prioritize the customer along the way to ensure a positive experience that is likely to lead to repeat business in the future. 

Sources:

1. https://retailwire.com/discussion/survey-says-consumers-want-online-orders-shipped-fast-and-free/
2. https://www.indeed.com/career-advice/career-development/provide-excellent-customer-service
3. https://smallbusiness.chron.com/importance-product-packaging-marketing-648.html