If you run an online store, manage inventory, or operate in manufacturing or wholesale, you’ve likely encountered the dreaded “backorder” status. Whether it’s due to supplier delays, sudden demand spikes, or miscalculations in stock levels, backorders are a critical — and often misunderstood — aspect of inventory management.
But here’s the thing: a backorder doesn’t have to mean a lost sale. In fact, when handled strategically, backorders can help you boost revenue, manage cash flow more efficiently, and strengthen customer loyalty, especially in high-demand or low-supply environments.
In this guide, we’ll break down what backorders mean, how they differ from “out of stock,” why they happen, and how to manage them effectively using best practices and powerful inventory software like Megaventory. If you’re looking to reduce delays, improve transparency, and turn backorder chaos into customer confidence, you’re in the right place.
Let’s dive in.
What Is a Backorder?
A backorder is a customer order for an item that isn’t currently in stock but is expected to be available soon. Instead of rejecting the order or marking it “out of stock,” you accept it and fulfill it later once inventory is replenished.
Think of it as saying: “Yes, we’ve run out — but we’re on it, and you’ll get your product soon.”
Backorders are common in retail, e-commerce, manufacturing, and wholesale environments. While they can help preserve sales in high-demand situations, they require careful communication and management to maintain customer trust.
Backorder vs. Out of Stock: Why the Distinction Matters
When a product is out of stock, the item is unavailable and cannot be ordered. In contrast, a backordered item is still purchasable, but delivery to the customer is delayed.
Here’s why this matters:
- SEO & sales optimization: Labeling a product “backorder” instead of “out of stock” may prevent search engines from de-ranking the product page.
- Customer retention: Allowing backorders allows loyal customers to reserve high-demand items, increasing satisfaction.
- Inventory forecasting: Marking items for backorder signals your system to reallocate or rush procurement.
| Term | Can Customers Order? | Expected Restock? |
|---|---|---|
| Backorder | ✅ Yes | ✅ Yes |
| Out of Stock | ❌ No | ✅/❌ Depends |
📝 Pro tip: Always display backorder status clearly at the checkout page with expected shipping dates. This builds trust and reduces support tickets.
Why Backorders Happen (With Real-World Examples)
Backorders aren’t always a result of poor planning. Here are some common and real scenarios:
- Demand spike during promotions: A beauty brand launches a flash sale and sells out its skincare kits in two hours. The rest of the campaign is saved by switching to backorders with a two-week delivery estimate.
- Vendor delays: A furniture retailer’s supplier faces delays due to port congestion. The items are late, but backorders allow continued order intake while managing expectations.
- Seasonal forecasting errors: A toy company underestimates Q4 demand. Switching to backorders allows them to capture pre-holiday sales they would have otherwise lost.
💡 Insight: Sometimes, a controlled use of backorders can boost revenue during high-traffic periods, as long as lead times are reasonable and transparent.
What Customers Expect When Placing a Backorder
Modern consumers are surprisingly open to backorders — if you get the communication right. Here’s what they expect:
- Clear delivery timelines (ideally a specific date range, not vague promises)
- Proactive updates (email or SMS alerts when shipping status changes)
- Easy cancellations (just in case they change their mind or find it elsewhere)
- Trustworthy checkout messaging (no fine print surprises after they’ve paid)
📊 According to a 2024 survey by RetailX, 63% of consumers are willing to wait up to two weeks for a backordered item — but only if communication is consistent.
Key Risks of Poor Backorder Management
If mismanaged, backorders can lead to significant problems:
| Risk | Consequence |
|---|---|
| Poor communication | Customer churn, refund requests |
| No ETA visibility | Reduced trust in your brand |
| Manual tracking | Operational chaos and errors |
| No system to prioritize orders | Wrong customers get items first |
Worse yet, recurring backorders with no systemized response can lead to long-term brand damage, especially on marketplaces where your reviews are public.
How to Handle Backorders Without Losing Customers
Managing backorders well means treating them not as an afterthought, but as a strategic layer of your fulfillment process. Here’s how to get it right:
1. Tag Backorders in Your System
Each order should be labeled and prioritized so warehouse teams know what to ship first when inventory arrives.
2. Create Dynamic ETA Pages
Give customers a self-service page to check the status of their backorder — Amazon does this, and so can you.
3. Use FIFO or Loyalty-Based Prioritization
Fulfill backorders in order of placement or prioritize long-term customers for limited restocks.
4. Offer Discounts or Freebies
Add a coupon to a backordered shipment as a goodwill gesture — this small act can turn frustration into loyalty.
The Role of Inventory Software in Backorder Optimization
You can’t scale backorders manually. You need software that tracks:
- Inventory availability in real time
- Lead times per supplier
- Expected replenishment dates
- Backordered SKUs and customer status
This is where cloud-based inventory systems such as Megaventory shine. Automation, reporting, and seamless order management can turn a backorder mess into a streamlined experience.
8. How Megaventory Helps You Master Backorders
Megaventory’s features are tailor-made to handle backorder workflows:
| Feature | How It Helps |
|---|---|
| Automatic backorder tagging | Easily flag incoming orders for out-of-stock items instantly. |
| Purchase Order integration | Link backorders with open purchase orders to forecast fulfillment dates. |
| Real-time inventory sync | Prevent overcommitting by showing true stock levels across locations. |
| Order prioritization tools | Control who gets what first when inventory arrives. |
| Notifications through Zapier | Trigger updates to customers automatically as order status changes. |
Final Thoughts
Backorders are unavoidable at times, especially in today’s volatile supply chain environment. But with the right systems and communication, they don’t have to be a source of stress or lost revenue.
In fact, handling backorders well can give your brand a competitive edge: while others are turning customers away, you’re capturing demand, keeping them informed, and turning delays into opportunities.
Spiridoula Karkani is a Digital Marketer for Megaventory the online inventory management system that can assist medium-sized businesses in coordinating supplies across multiple stores. She is navigating the ever-shifting world of marketing and social media.