A backorder happens when a customer places an order for a product that's temporarily out of stock but still available to purchase, with delivery promised once you restock. That way, instead of losing the sale, you're basically saying: "We're out right now, but we'll get more and we'll ship yours the second it arrives."
Backorders exist in that tricky space between "in stock" and "sold out," and how you handle them can either make or break customer trust.
This guide breaks down what causes backorders, when it makes sense to accept them, and actionable strategies to reduce them in your warehouse operations.
What is a backorder?
A backorder is an order for a product that's currently out of stock but expected back soon. Instead of turning away customers, you accept their order now and fulfill it when inventory arrives. Think of it like putting your name on a waiting list at a busy restaurant. You're committed (and already have your eye on what you want), you just need to wait your turn.
The backorder meaning comes down to this: The customer commits to purchasing, and you commit to delivering when stock gets replenished.
What is in a name, really? Out in the world, you might encounter it written as "backorder," "back order," or "back-ordered.” They all mean the same thing.
How backorders work
What really happens when something is backordered? The process follows a fairly simple path ...
A customer orders an item you don't have in stock right now. Rather than declining the order, your system accepts it and marks it as backordered. Meanwhile, behind the scenes, your supplier or manufacturer is working to replenish your inventory. Then, when that stock arrives and gets checked into your warehouse, you fulfill the waiting order and ship it out.
Here's how it flows step-by-step:
- Customer places order: They buy an item listed as available or backordered on your website.
- Order gets flagged: Your system tags it as awaiting stock.
- Stock arrives: You receive the replenishment shipment from your supplier.
- Order ships: The backordered item gets picked, packed, and shipped to the customer.
From the customer's viewpoint, being backordered means they've paid (or agreed to pay), but delivery is postponed until you restock.
Backorder vs out of stock
These terms get confused constantly, but they represent completely different situations.
When something is out of stock, you're not taking orders for it what-so-ever. The customer reaches a dead end. They can't purchase, and you lose the sale.
When something is on backorder, you're accepting orders despite having no inventory available. The customer can buy now and receive the item later.
| Backorder | Out of Stock | |
| Can customers order? | Yes | No |
| When is it fulfilled? | After inventory is replenished | Not fulfilled until restocked and relisted |
| Customer expectation | Delayed delivery | Unavailable item |
| Revenue impact | Revenue continues to flow | Revenue stops |
** The key difference is that backorders keep revenue flowing. Out of stock means you're turning money away.
What causes backorders
Backorders usually stem from visibility gaps or supply chain disruptions, not just "selling too much." Understanding the root causes helps you prevent them before they happen.
Inventory tracking errors and discrepancies
Manual counts and outdated systems create mismatches between what you think you have and what's actually on the shelf. Without solid inventory control practices in place, if your records show 50 units but you really have 12 … you're going to oversell.
Multi-channel overselling
Selling across multiple platforms without synced inventory is a recipe for backorders. You list the same 20 units on Amazon, Shopify, and Walmart, and suddenly you've promised 60 units you don't have. Real-time inventory sync across channels prevents this problem entirely.
Inaccurate demand forecasting
Poor sales predictions leave you short. Maybe you underestimated holiday demand or missed a viral trend. Either way, you're scrambling to restock while orders pile up.
Low safety stock levels
Safety stock is your buffer inventory. The cushion that absorbs unexpected demand spikes. Running too lean means any surge in orders tips you straight into backorder territory.
Supplier and manufacturer delays
Sometimes the problem isn't on your end at all. With 82% of supply chains affected by tariffs, raw material shortages, production issues, or shipping disruptions from your vendors can leave you waiting for inventory that's already been promised to customers.
Long supplier lead times
Extended supplier lead times, the gap between placing a purchase order and receiving goods, increase backorder risk. This is especially common with imported products where ocean freight adds weeks to your timeline.
Advantages of accepting backorders
So, why would you intentionally allow backorders?
Turns out, there are some real strategic benefits worth considering:
- Capturing sales during stockouts: You secure revenue that would otherwise vanish if customers couldn't place orders at all.
- Lowering warehousing expenses: Less need to maintain surplus inventory "just in case" – backorders enable you to run a leaner operation.
- Uncovering demand patterns: Backorder information reveals actual demand that surpasses your available stock, which informs future inventory planning.
- Building purchase urgency: Scarce availability can motivate buying decisions (consider limited product releases or high-demand launches).
- Strengthening cash flow: Collecting payment upfront for future delivery improves your cash flow.
For certain businesses, backorders represent a calculated strategy rather than an operational shortcoming.
Challenges of selling on backorder
That said, backorders aren't without cost. They come with some real tradeoffs.
- Order cancellations: Customers might cancel when wait times extend too long, costing you both the sale and any processing resources you've already committed.
- Customer dissatisfaction: Delayed fulfillment damages trust. 65% of consumers will abandon a retailer after experiencing just 2 to 3 late deliveries.
- Operational complexity: Managing backordered items separately, coordinating multiple fulfillment schedules, and orchestrating restocks creates additional workload for your team.
- Billing complications: When should you charge? How do you process refunds for cancellations? What about partial shipments? These questions get messy fast.
The secret is balancing the revenue benefits against the customer experience costs.
Tips for minimizing backorders
You can't eliminate backorders completely, but you can substantially reduce them with the right systems and practices in place.
1. Use real-time inventory tracking
Understanding exactly what's available at any given moment prevents overselling. Barcode scanning and live inventory counts maintain record accuracy – real-time inventory tracking eliminates guesswork entirely.
2. Sync inventory across all sales channels
A centralized inventory view across e-commerce, marketplaces, channels, and locations prevents double-selling the same unit. A WMS with multi-channel sync manages this automatically, refreshing quantities everywhere instantly when a sale occurs.
3. Set safety stock and reorder points
Your reorder point is the inventory threshold that triggers a new purchase order. Configuring this properly, alongside adequate safety stock, makes sure you're restocking before inventory reaches zero.
4. Diversify your supplier base
Multiple suppliers reduce dependency. So, when one supplier experiences delays, another can bridge the gap. Single-source dependency creates a genuine risk.
5. Monitor demand trends and seasonality
Historical sales data enables you to forecast demand spikes. Holidays, promotional campaigns, and seasonal patterns follow predictable cycles. Use that intelligence to stock appropriately.
How to communicate backorders to customers
How you handle communication will often determine whether customers wait patiently or gather the pitchforks.
Notify customers immediately
Don’t wait. Inform customers the moment you discover an item is backordered. Honesty builds trust, even when delivering disappointing news.
Provide realistic delivery estimates
Offer honest ETAs based on your supplier timelines. Underpromise and overdeliver whenever possible (consumers rank on-time delivery above speed). Therefore, nothing aggravates a customer more than constantly shifting timelines.
Offer alternatives or cancellation options
Let customers swap for similar in-stock items or cancel easily. Forcing them to wait when they’d rather not is a fast way to lose goodwill.
Send restock notifications
Automated messages when backordered products ship keep customers updated and reduce support inquiries. They shouldn't have to chase you down for updates.
How long do backorders usually take
This is one of the most common questions, and the honest answer is: It depends.
Backorder timelines vary widely based on supplier lead times, product type, and whether you're dealing with a manufacturing delay versus a shipping delay. Some backorders resolve in days. Others extend into weeks or even months for specialized products.
The key is clear communication with your supplier ... and then with your customer. If you don't know when the stock is arriving, say so. Customers appreciate honesty more than vague promises.
How 3PLs and warehouses prevent backorders
Fulfillment partners leverage inventory management platforms, real-time visibility, and automation to keep stock levels accurate. A purpose-built WMS with features like multi-channel sync, reorder alerts, and lot tracking helps catch potential stockouts before they become backorders.
For 3PLs managing inventory for multiple clients, this visibility is even more essential. Because you're juggling dozens of SKUs across various accounts, one overlooked reorder point can trigger customer complaints and chargebacks.
How to decide if backorders are right for your business
Not every operation manages backorders the same way. Your approach depends on multiple considerations:
- Product type: Custom or made-to-order items naturally involve backorders. Commodity products with easy substitutes? Customers might just buy elsewhere.
- Customer expectations: What's normal in your industry? Some sectors expect delays. Others demand instant gratification.
- Communication capacity: Can you keep customers informed throughout the wait? If not, backorders will hurt more than help.
- Operational readiness: Do you have systems to track backordered items separately and fulfill them promptly when stock arrives?
If you're ready to reduce backorders and streamline fulfillment, the right WMS makes all the difference. Book a free product tour to see how Zenventory helps 3PLs and warehouses stay ahead of stockouts.
FAQs about backorders
What is a partial backorder?
A partial backorder happens when only some items in a multi-item order are out of stock. You ship what's in stock immediately and fulfill the remainder later.
What does rolling backorder mean?
A rolling backorder is when expected restock dates keep shifting due to ongoing supplier delays, extending the customer's wait time.
What is the difference between a backorder and a pre-order?
A backorder applies to an existing product that is temporarily unavailable. A pre-order applies to a new product that hasn't been released yet.
What does backorderable mean?
Backorderable means a product can be ordered even when it’s out of stock, with fulfillment expected once inventory is replenished.
Can a backordered item be canceled?
Yes. Most retailers allow customers to cancel backordered items before they ship, though policies vary by seller.
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