How to Manage Backorders Efficiently
Backorders are orders for goods or services that you can't fulfil at the time of order due to insufficient availability. Depending on your business model, you may routinely take many backorders, or they may be a rarity. Either way, backorders are an essential factor in inventory management analysis. If a company consistently sees items on backorder, this could be an indication that it needs to buy more generously. Backorders are costly to businesses in several ways, including:
- Loss of business by not providing the goods demanded by its customers.
- Costly gestures of goodwill for late deliveries (e.g. expedited shipping, discounted prices).
- Wasted time caused by the extra time your team have to spend on order admin.
- Loss of business due to bad word of mouth if stock shortages are not handled well, or are too frequent.
Orderspace makes handling backorders more efficient. When you set up each product, you choose whether you want customers to be able to backorder it or not. If you allow backorders, you can indicate to your customers that the item is on backorder, or show the stock status as available. Whichever is more relevant to the way you work. If you choose to disallow backorders, once the stock value is 0, the item will show as out of stock and will not be available to order.
From the customer perspective, keeping them informed and giving an ETA (estimated time of arrival) will go a long way to easing their inconvenience. Find out if there is a specific deadline for delivery, and if you can't commit to supplying by that day - be direct about that. Maybe you can offer them an alternative product?
Sign up now for your free, no-obligation trial and see how Orderspace makes backorders, pre-orders and stock orders so much easier to manage.
Further Reading:
How to minimize backorders
The actual cost of a backorder
How to manage pre-orders efficiently
Delivering excellence to your wholesale customers
Why your retail website won't work for your wholesale customers