It is essential to know about backorders to prevent major customer service problems. Backorders can cause loss in sales as if the item is not available, the customer is likely to buy from a competitor instead.

Thus, with comprehensive you can simply lessen the impact of low stock levels in your ecommerce venture. Read through the article to learn what backorders are and strategies to stop them.

What are Backorders?

Backorders are customer orders that are not fulfilled because of the unavailability of the product. In other words, a backorder is when any item is not in stock on a temporary basis. This means someone can still order an item but receive it at a much later date.

To handle backorders effectively for seamless ecommerce fulfillment, you can either handle it internally or seek assistance from a third-party logistics (3PL) warehouse service.

What Causes Backorders?

Backorders occur when businesses receive items that are out of stock. This happens due to multiple reasons during the the operations of your ecommerce store, including: 

1.Unusual Demand:

Backorders occur when demand for an item exceeds the available stock. To avoid backorders, businesses should stay informed of market trends and customer demand to predict the required inventory. 

2.Supply Chain Disruption:

The challenges with the supply chain in your ecommerce store may occur unexpectedly due to non dire circumstances. Some instances could be a shortage of raw materials or a complete production shutdowns.

Additionally, unforeseen events like hurricanes or earthquakes can cause disruptions in the supply by causing damage to manufacturing facilities and transportation networks. 

3.Human Error in Inventory Management:

Backorder inventory may also occur due to human errors in inventory management. The staff members may be unaware of the out of stock items and they may still show it in the records. This can result in the system showing inaccurate information, potentially resulting in customers ordering unavailable items.  

4.Changes in Customer Behavior :

Unexpected changes in customers behavior may result in backorders. This could be a rise in popularity of the item or a holiday season, causing the balance between supply and demand to be disrupted. Businesses need to monitor customers’ preferences and follow current market trends to maintain the right expectations regarding backorders.

How to Prevent Backorders?

It is always easy to tell your customers that you do not take any backorders. That does not seem to be a feasible option as backorders only occur with best selling items. It is viable if you keep a balance and make sure there aren’t many orders the customers are waiting to receive. Here are some measures to prevent backorders.

1.Have Safety Stock:

Ecommerce owners must use an inventory management system to monitor their product stock in real-time to avoid inaccuracy of information. Establishing a safety stock threshold to avoid supplier or demand issues will help in sales and demand order prediction.

2.Regularly Monitor Inventory of Popular Items:

Popular items or those in high demand and tend to sell out fast. It is essential to monitor their stock levels as customers may buy them at a faster pace. Keep checking the items on a regular basis so it can be purchased once more items are needed. Maintaining communication with suppliers and checking item availability enables informed decisions about sales.

3.Have Open Communication with Suppliers:

Poor communication between suppliers and businesses results in supply chain disruption. It is important to establish clear communication to point out any issues that may arise with the suppliers. This helps avoid delays in restocking items and facilitates quick purchase decisions for managing inventory in your ecommerce store.

4.Have Multiple Suppliers:

Engaging with multiple suppliers has its benefits, especially the choice of having a backup if your main supplier is not able to deliver on time. The diverse supplier base assures a systematic supply chain, providing alternative sourcing when necessary. 

Final Thoughts

If you want to reduce expensive backorders, you need a robust inventory management system in your business strategy. This is one of the important steps towards excellent customer service. Ecommerce market has become complex with the increase in buyers through the internet, having the latest technology system with the best results is necessary.

United Prep is glad to assist if you are too busy to manage the inventory management of your ecommerce store. Call one of our sales representatives and learn about personalized offers we have for you.