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May 28, 2021

Backorders vs. Out of Stock- Things to Know About Keeping Items Available

Backorders are the items that are presently out of stock but will be available soon. Although you can buy back-ordered items, you won't receive the orders until they are back in stock. Manufacturers plan and order these products but do not produce them. Therefore, it means that your order will stay on the list until they are available. If any SKU is 'on backorder,' it means that you are waiting for the unavailable stocks.

DIFFERENCE BETWEEN BACKORDER VS. OUT OF STOCK

There is a difference between backorders and out-of-stock. For example, if any product shows out of stock on your website, you cannot place an order for it. However, if any item is in backorder, you can still place an order. Instead of the regular shipping time, you will receive that item after a long time.

The reason behind this is the turnaround time of the backorder products is more than the normal ones. Depending on the business models, the decision to mark any item backorder or out of stock is taken.

Some of the common scenarios are whether the customers will wait for the product to be available. Another standard method includes whether your system has the advantage of tracking backorders, etc.

WHETHER CUSTOMERS WILL ACCEPT DELAYED SHIPPING

It is necessary to understand that backorders never work for every business. For example, if any product unavailable on your site is available somewhere else, customers will buy it from there. Moreover, if the items are immediate needs like household products, it is evident that they won't wait long.

However, when it comes to niche products, backorders work perfectly. For example, if your products are unique, then waiting to receive the product will make your website exclusive. Moreover, after the disruptions in the global supply chain arose, customers accustomed to such situations.

Related article: Expedited Shipping- Everything you Should Know

PROS AND CONS OF ACCEPTING BACKORDERS

In crowdfunding business model work around the concept of backorder. You have to pay for a 'reward' along with the understanding that you will get it after several months. Let us check out some of the pros and cons of accepting backorders.

Pros

  • Promising demand for the production run
  • Easy to start a conversation with customers
  • With back orders, you can jump off point for expanding production
  • Gather market insight in advance

Cons

  • More risk of canceled orders
  • Headaches with payment processing
  • More customer service demands

ADVANTAGES OF SELLING BACK-ORDERED ITEMS

With the crowdfunding model, you can understand the positive factors of receiving preorders for the products. Here are a few advantages of selling back ordered items.

YOU CAN GET CUSTOMER CONTACTS

If any customer places an order, you get the contact information. When necessary, you can easily communicate with them regarding their current demand as well upcoming orders.

BENEFIT OF PREPAYMENT

Most crowdfunding platforms take the payment upfront, whereas the businesses use the capital for increasing the production of any product. If you can process the entire payment for holding the backorder, it will help with cash flow in manufacturing and distribution.

Handling damaged supply chains, as well as production delays, is no doubt a headache. However, you still have hope and can make the most out of bad situations by providing back orders to the customers.


Next article: Popular Amazon Inventory Management Tools You Can Use For eCommerce Business

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