Having a solid understanding of backorders is essential to avoiding major customer service issues.
With the right information and attention to detail, you can minimize the impact of backorders on your business or avoid them entirely.
Learn what causes backorders and how to prevent them from happening in your eCommerce business.
What Are Backorders?
Backorders are any order that cannot be fulfilled right away due to inventory availability.
Business owners use backorders when demand for a product exceeds its supply. This can occur for a variety of reasons, such as high demand or manufacturing delays. Sellers can continue to fulfill orders even if inventory levels are low or nonexistent, preventing any potential losses in sales.
Backorders date back centuries when merchants kept records of orders that could not be fulfilled at the time and offered to provide these goods once supplies became available. This practice grew in popularity over the years and is an integral part of inventory management today.
Managing backorders efficiently can be a great way to maintain customer satisfaction while addressing inventory shortages, but it’s essential that businesses have an efficient system in place for order fulfillment and inventory management.
This will ensure that backordered items can be fulfilled in a timely manner and ultimately reduce backorders with more effective inventory forecasting and replenishment.
6 Causes of Backorders
Backorders are common in supply chain management and frequently caused by one or more of the following scenarios:
1. Demand exceeding supply
Backorders occur when demand for a product is higher than what is available in stock. To avoid backorders, businesses should be aware of market trends and consumer demand so they can accurately forecast the necessary inventory.
2. Human errors in inventory management
Backordered inventory can also occur due to human errors in inventory management. For instance, staff may be unfamiliar with…
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