Dealing with backorders can be a serious headache. The last thing any eCommerce business owner wants is to receive an order that they are unable to fulfill right away. It’s not just about potentially losing the money for that particular order – it’s about inconveniencing customers, making a mess out of payment processing, and losing future business, too.
Some items are more difficult to attain, which means that backorders can be expected and accepted by your customers. But, there are many more items that can be found elsewhere, particularly if you sell on a market like Amazon. The way that you handle your backorders can be crucial to the success of your eCommerce business.
If you’re new to eCommerce order fulfillment, you’ve probably got a lot of questions like, “How do I avoid backorders?” and “How long do backorders take?” and “What does backorder even mean?” Luckily for you, you’ve just found the ultimate guide to all these questions and more. Read on to learn all you need to know about coping with backorders.
What Does a Backorder Mean?
A backorder happens when an item is not currently in stock, but it is expected to be in stock in the future. It happens when an item is purchased by the customer ahead of time. While this can be a big inconvenience to the customer, it is also a good indicator to the seller that the demand for this item is higher than they might have previously assumed, and therefore, it can be used as a tool for inventory management.
However, it’s also important to note that on sites like Amazon and ClickBank, backorders can be damaging to a seller’s reputation, pushing a business further down the eCommerce food chain or even leading to getting dropped from the platform.
Difference Between Backorder and Out-of-Stock
The term “backorder” can sometimes be confused with an item being out-of-stock. While backorder does in fact mean that the item a customer is searching for is not currently in stock, it doesn’t mean that they’ve reached a dead end. Backorders are an opportunity for the customer to place their order prior to the item becoming restocked so that they can receive it as soon as possible without having to worry about it becoming sold out once more.
How Long Do Backorders Take?
You now know what they are and how they can affect your business, so now you’re probably wondering exactly how long backorders take to fulfill.
This is a question that is incredibly useful to have the answer to, but that answer can be difficult to ascertain. The time needed to fulfill a backorder is dependent on the supply chain. For this reason, sellers must be in constant contact with their supplier in order to accurately assess the delivery timeframe.
It’s always a good idea to provide an expected date to customers, but you won’t always be able to do that. If you provide an inaccurate date or one that’s months down the road, you may very well lose business over it. This is why it’s best to avoid backorders altogether.
What to Do with Backorders
The way in which you should handle your backorders will vary depending on what you’re selling. Certain items can be expected to be on backorder, while others should never leave customers waiting. Below are a few tips for how to handle backorders of any kind.
Wait to Process Payment
Taking the money for the order ahead of time can lead to all kinds of headaches down the road. Some credit card vendors won’t even allow payment processing for backordered items, so you probably shouldn’t, either.
It’s not always the best choice to backorder, particularly if it will incur consequences from vendors such as Amazon. Sometimes, it’s best to just cancel instead.
Take Your Product Down
Don’t get the customer’s hopes up. Instead, just unlist the product until the item is back in stock.
Reach Out to Customers
Show your customers that you care about their business and that you’re sorry for the inconvenience by asking if they’re okay to continue waiting for their item or if you can interest them in a different product.
Find Another Supplier
This is not always the easiest option, but it’s still possible.
How to Avoid Backorders
Avoiding backorders is all about optimizing your stock levels by having a fail-safe inventory system in place. This is something that requires a lot of calculation and a bit of trial and error, but getting it done can be made easier if you take the following steps.
Utilize Real-Time Data
An inventory management system can help to provide you with the hard data necessary to accurately forecast the inventory you’ll need. A perpetual inventory system, or a method of keeping inventory by updating it in real-time, can be vital to avoid backorders.
Update All Order Channels
All platforms should remain up-to-date to avoid an order being placed on an item that is not currently in stock.
Set Up a System for Inventory and Warehouse Management
Establish an accurate method for keeping inventory using either an IMS or a third-party logistics provider.
How 3PLs Help Avoid Backorders
A third-party logistics provider, or 3PL, can outsource the job of inventory management and warehousing to a team of experts. They can also provide you with the following services.
Data-Driven Inventory Management
A 3PL can remove much of the guesswork from inventory management by using internal and external data to keep you from understocking or having backorder issues.
Accurate Warehouse Inventory
Eliminate the chance of listing an item that is not in stock by maintaining a highly accurate warehouse inventory.
Solutions for Dealing with Backorders
A 3PL can expand your team and provide you with expert advice for dealing with backorders.
Inventory Management with Third-Party Logistics
A 3PL can cover all phases of inventory management, including warehousing, packing, and shipping, for you, helping you to avoid customer dissatisfaction, loss of sales, and loss of future business incurred by backorders.
If you’re currently using fulfillment by Amazon, you’re likely losing money to hidden fees, which may be cutting into your profits. There are better alternatives. Read on to learn what a 3PL can do for you.
3PLs can provide warehousing for you, which means that you can save a ton of money on storing your inventory.
Packing and Shipping
Have your orders picked, packed, and shipped by a 3PL in order to save time and provide a more efficient and accurate method of delivering your products to customers.
Perpetual inventory management is crucial to any business that has reached a certain size, especially when they plan on continued growth. However, it usually requires a large upfront investment. 3PLs can remove the need for that investment by providing perpetual inventory management for you. All you need to do is pay a small fee per order. This can be great for small and medium-sized businesses that are focusing on growth.
Print Bind Ship: The Best 3PL for eCommerce
If you’re the owner of an eCommerce business looking for a team of experts to help you with inventory management; look no further. Print Bind Ship handles everything from warehousing to complete order fulfillment. We provide you with a team of eCommerce experts that can handle the hassle of backorders and help you to make better business decisions. Contact us today for a free consultation!