How Does Backorder Work?

Has the price of the shoe you've wanted to buy for a long time finally dropped? It's Christmas time, and all the stores are on extreme discounts? Or how long have you been thinking about the bag that woke you up in the middle of the night and found yourself in the online shopping world? You may encounter backorder! So what exactly is the backorder? You will find all the details in today's article.

Let's say you shop online. You opened the website and when you clicked on a product you noticed it didn't appear in stock. But it's not something that's going to last forever, of course. Manufacturers give you an option to buy the product at any time. You will only have the product at a later date.

How Does a Backorder Work?

Let's explain with an example of how the backorder works. You have a company and you sell products. Your business is excellent and everything is going well. The demands so far have been excellent and your sales have always gone great. You've used your opponents. Now that you're at a point where you can't keep up with the demands. Seven different customers ordered products. Each wants three products, but the number of products left in stock is 9. In such a case, you will only be able to please your three customers.

If you don't want your replication to be damaged, you can't send four customers who don't get what they want in frustration. You need to do a little calculation and please everyone. So the best thing you can do is send each one product and promise to supply the rest to your customers as soon as possible. So you'll have the trust of all of them, and a product is better than zero, isn't it?

You may be interested in: What is work in process inventory? (WIP)

How Long does the Backorder Usually Take?

Backorders generally do not last more than 14 days, but this can also vary according to the customer's request. Amazon, for example, has a definite rule that it must send that order within 30 days of order ingestion!

What is the Difference Between Backorder and Lost Sale?

How good their service is for businesses is determined by the sum of incoming requests. Un fulfilled requests result in backorder or lost sale. If you cannot meet the customer's request or fulfill the request within the time frame you have postponed, you will lose your sales. You can't sell something naturally that's not in your inventory. Therefore, it is very important to do lost sales analysis and determine where you made a mistake and re-create your route. Not being able to meet customer demand on time will create a bad reputation!