That way, Jane becomes a happy, and John keeps gaining profit. This is how backorders help making sure everyone gets what they want, even when the product is not available. 🤶📦🌟

For holiday stories to have a happy ending all the time, we will explain how John's backorder strategy works in today’s article. What exactly is the backorder? How it's different from stock-out and preorder? How does backorder work? Is its meaning the same for both customers and online store owners? We'll briefly cover these points and make the concept clearer for everyone.

‍‍

What is Backorder?

📌 Backorder is simply when a business owner takes orders for products that are currently not in stock. In this way, customers can order the products they desire when they need them smoothly and the store doesn’t lose profit.

How is backorder different from stock-out and preorder?: Backorder is when a customer orders something not currently available, agreeing to wait until it's back in stock. For example, if a popular item is sold out, the customer orders it, and the seller promises to deliver it once restocked. Unlike "out-of-stock," where the item is simply unavailable now, and "preorder," where you order something before its release.

How Does Backorder Work?

👀📈 Merchant’s Perspective for Backorder

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 gained revenue and all your customers are satisfied. This is simply how backorder works.

👀🛍️ Customer Perspective for Backorder

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. Here is where backorder comes into play. If the product is not available in the current stock but you can purchase it for a future date, that's what we call backorder. In other words, you have the opportunity to buy the product, even if it's temporarily out of stock, by placing an order for a later delivery.

Why Backorder is Important?

To understand this, let’s go over some solid data briefly. According to report by authors Daniel Corsten and Thomas Gruen, in the U.S., when products are sold out online, 15% of people check out other websites, and 60% find something similar from the same online store. Half of the customers might try a different brand, while the rest stick with what they know. Around 10% head to a physical store to get what they need, and about 15% either wait or cancel their buy.

From this, we understand that stock-out situations create challenges for both customer experience and sales processes of a business. Backorder emerges as a smart strategy in this context because it prevents you from losing customers and allows you to turn stock-out situations into revenue. It's a win-win solution for everyone involved in the process. 🤝

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! There are some practices that help you to use backorders more efficiently.
If you offer backordering, make sure to include the timelines in your order placement and shipment policies on your website. Providing realistic timelines helps manage customer expectations and enhances satisfaction during the backorder fulfillment process. Aim to offer as clear a timeline as possible. Integrating your backorder solution with Klaviyo can help you communicate clearly with customers to set fulfillment timeline realistically.

The duration of a backorder depends on several factors, including:

• Your supplier's production time
• Product demand
• Supply chain length
• Shipping requirements

What is the Difference Between Backorder and Lost Sales?

Using backorders as a strategy makes difference for your business, but without a proper plan, it may turn into a failure. How good their service is for businesses is determined by the sum of incoming requests. A unfulfilled 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!

What is the Difference Between Backorder and Out of Stock?

A backorder does mean an item is currently out of stock, but there’s a key difference. A backorder implies a temporary unavailability with a promise to restock the item in the future, indicating a delay in fulfillment. Conversely, being out of stock means the item is not expected to be restocked, signaling a complete absence without future availability.

What is the Role of Fabrikatör in Backorder Process? ⚡

If you have an online store on Shopify, you might already know that managing backorders directly there isn't a built-in feature. What you need to do is using an inventory management assistant just like Fabrikatör. Why? What Makes Fabrikatör Essential for Shopify Stores? Fabrikatör turns backorders into revenue and so much more!

🤝 Fabrikatör knows that shoppers like brands that tell them when their orders will arrive. It gives your store transparency and makes you talk openly with customers during backorders, so that you make money even if a product is out of stock. Plus, it's tailor-made for your Shopify store, doing all the work for you and making sure you don’t run out of products.

To sum up, Fabrikatör efficiently operates backorder by generating revenue when out of stock or from inventory in transit, keeping your customers informed with Klaviyo integration, maximizing AOV and LTV.

Why not give Fabrikatör a shot now? It's the perfect tool to up your backorder game, ensuring accurate management and precise tracking of all your inventory insights. Let's make inventory management a breeze! 🚀✨Imagine Jane, a potential customer, all excited about buying Christmas decorations on Shopify. Just before Christmas, the tree ornament she loves is out-of-stock at John's Shopify store. 🤷♀️ But guess what? John knows more of those decorations are on the way. Instead of Jane going to another store or giving up buying, John can suggest something smart. He can tell Jane: "Hey, you tell me you want these decorations, and when the new batch arrives, they'll be all yours.”