Backorder & Pre-Order Management: Complete Guide

published on 02 July 2024

Here's what you need to know about managing backorders and pre-orders:

  • Backorder: Customer orders out-of-stock item that will be restocked soon
  • Pre-order: Customer orders unreleased item available in the future

Key benefits:

  • Prevent lost sales
  • Gauge product demand
  • Improve supply chain
  • Manage customer expectations

Effective management involves:

  1. Setting clear policies
  2. Using order management software
  3. Communicating frequently with customers
  4. Working closely with suppliers
  5. Monitoring key metrics
Aspect Backorders Pre-orders
Availability Out of stock, coming soon Not yet released
Customer expectation Get item later Get on release date
Payment Usually at time of order May be full, partial, or on release
Inventory planning Helps manage current stock Aids future inventory planning

Focus on clear communication, efficient systems, and customer satisfaction to successfully handle backorders and pre-orders.

Understanding Backorders

Definition of a Backorder

A backorder happens when a customer buys a product that's not in stock. The store sets the item aside and works to get it to the customer as soon as possible. Stores usually try to send backordered items within a few weeks.

Why Backorders Happen

Backorders can occur for several reasons:

  • Supply problems: Delays in making or shipping products
  • Sudden high demand: More people want the product than expected
  • Stock choices: Stores keeping less stock or using dropshipping

Backorder vs. Out of Stock: Key Differences

While both mean you can't get the product right away, backorders and out-of-stock items are different:

Feature Backorder Out of Stock
When it will be available Soon Unknown
Can you buy it? Yes No
What the customer expects To get the item later May need to look elsewhere
Effect on sales Keeps sales going Might lose sales

Pre-Order Basics

What is a Pre-order?

A pre-order is when a customer buys a product before it's available. This can be for:

  • New products not yet released
  • Items currently out of stock
  • Products with high demand

Pre-orders let customers reserve items early, so they get them as soon as possible.

Advantages of Pre-orders for Businesses

Pre-orders help businesses in several ways:

Advantage Description
More sales Sell products before they're available
Know demand See how many people want a product
Better cash flow Get money before product release
Less risk Avoid making too many products

Different Pre-order Approaches

Businesses can use three main pre-order methods:

Approach How it works
Pay later Customer pays when product ships
Deposit Customer pays part now, rest later
Full payment Customer pays all upfront

Each method has good and bad points. Businesses should pick the one that works best for them and their customers.

Setting Up Backorder Systems

A good backorder system helps stores manage their stock and keep customers happy. Here's how to set one up:

Creating Backorder Rules

Make clear rules for backorders:

Rule Type Description
When to accept Based on product demand and restock time
How to prioritize Decide which orders to fill first
Customer communication How and when to update customers

Tracking Stock and Predicting Demand

Use software to:

  • Keep track of what's in stock
  • Watch sales patterns
  • Guess future demand

This helps stores know when they might run out of items and plan ahead.

Talking to Customers About Backorders

Good communication is key:

Action Purpose
Tell customers about delays Keep them informed
Give estimated delivery dates Set clear expectations
Offer other options Help customers find alternatives

For example, send an email saying:

"We're sorry, but the item you ordered is out of stock. We expect to have it back in stock by [date]. We'll ship it to you as soon as possible. If you'd like to choose a different item instead, please let us know."

Being open and honest helps build trust with customers.

Managing Pre-Orders Effectively

Good pre-order management helps online stores keep customers happy and build trust. Here's how to do it well:

Deciding Pre-order Amounts

When choosing how many items to pre-order:

Consider Why It Matters
How long it takes to make Affects when you can deliver
Shipping times Impacts delivery dates
Marketing plans Can increase demand

Try to order enough to meet demand without having too much left over.

Setting Delivery Dates

Tell customers when they'll get their items:

  • Be clear about delivery dates
  • Add extra time for unexpected delays
  • Update customers if dates change

Keeping Customers Informed

Talk to customers often about their pre-orders:

What to Share How to Share It
Order status Emails
Making progress Social media posts
Shipping updates Website updates

More tips for good pre-order management:

  • Offer different ways to pay
  • Use social media to get people excited
  • Make it easy to pre-order and check order status
  • Tell customers about any changes quickly
  • Think about limiting pre-orders to create buzz

Tools for Backorder and Pre-Order Management

To handle backorders and pre-orders well, stores need good tools. These tools help keep customers happy and make more money. Here are some key tools to think about:

Order Management Systems

Order management systems (OMS) help stores handle orders from start to finish. They work with other tools to get orders out fast and correctly. This can help cut down on backorders.

OMS Examples What They Do
Brightpearl Tracks orders
Cin7 Manages stock
Orderbot Helps with shipping

Stock Management Software

Stock management software helps stores keep track of what they have and what they need. It can show what customers like to buy, so stores can plan better.

Software Main Features
TradeGecko Tracks stock levels
Skubana Shows buying trends
Orderhive Helps order more stock

Customer Communication Tools

These tools help stores talk to customers about their orders. They can send updates automatically, so customers know what's happening with their order.

Tool Type How It Helps
Email software Sends order updates
SMS software Sends text reminders
Chatbots Answers customer questions

Using these tools can make managing backorders and pre-orders easier for stores and better for customers.

Improving Customer Satisfaction

Keeping customers happy is key when dealing with backorders and pre-orders. Here's how to do it:

Keeping Order Status Clear

Tell customers what's happening with their order:

Action How to Do It
Send updates Use email software
Give expected dates Be honest about timelines
Explain delays Tell why items are late

Offering Other Options or Rewards

When items are backordered:

Option Example
Give other choices Suggest similar products
Offer rewards Give a discount on next buy
Add extras Include a free gift

This shows you care about keeping their business.

Answering Customer Questions

Be ready to help customers:

Task Why It Matters
Have a support team To answer questions fast
Know common issues To solve problems quickly
Be patient To keep customers calm

Good support can stop customers from getting upset about wait times.


Money Matters

Managing money well is key when dealing with backorders and pre-orders. Here's what to keep in mind:

Pricing for Backorders and Pre-orders

Setting prices for backorders and pre-orders can be tricky:

Consideration Action
Cover costs Make sure you don't lose money
Keep customers Don't set prices too high
Offer discounts Give a small price cut for waiting

Be careful not to cut your profits too much when offering discounts.

Managing Money Flow

Backorders and pre-orders can affect how money comes in and out of your business:

Challenge Solution
Late payments Ask for some money upfront
Upfront costs Use a payment plan
Balancing expenses Plan your spending carefully

Think about asking for deposits to help cover your costs while waiting for full payment.

Bookkeeping for Backorders and Pre-orders

Good record-keeping is important for backorders and pre-orders:

What to Track Why It Matters
Sale value Know how much you'll earn
Cost of goods Understand your profits
Future obligations Keep track of what you owe customers

In your books, count backorders as money you owe customers until you send their items.

Working with Suppliers

Good supplier relationships are key for managing backorders and pre-orders. Here's how to work well with suppliers, cut down wait times, and plan for delays.

Partnering with Suppliers

To work well with suppliers:

Action Why It's Important
Talk often Keeps everyone on the same page
Ask for updates Helps you know when items will arrive
Keep good records Avoids mix-ups

Reducing Wait Times

To get items to customers faster:

Strategy How It Helps
Focus on important items Gets key products to customers sooner
Use multiple suppliers Gives you backup options

Planning for Delays

To be ready for problems:

Step What It Does
Think about what could go wrong Helps you prepare
Watch stock levels Shows when you might run out
Look at past sales Helps guess future needs

Checking Performance

To make sure your backorder and pre-order system works well, you need to check it often. This means looking at important numbers, studying data, and making changes to improve.

Key Numbers to Watch

When checking how well your backorder and pre-order system is doing, look at these important numbers:

Number What It Means
Backorder rate How many orders can't be filled right away
Fulfillment rate How many orders are sent on time
Customer happiness How happy customers are with the process

Using Data to Get Better

Looking at data from your system can help you find ways to improve. Try to find patterns that can help you make better choices. For example:

Question Why It Helps
Which items are often backordered? Helps you know what to stock more of
Why do backorders happen? Helps you fix common problems
How do backorders affect customers? Shows if customers are likely to buy again

Always Improving

Keep looking at your system and making it better. Stay up-to-date with what's new in the business, what works well, and what customers say. This helps keep your system working well and keeps customers happy.

Problems and Fixes

Common Mistakes to Avoid

When managing backorders and pre-orders, businesses often make these mistakes:

Mistake Impact
Poor customer communication Unhappy customers
Unclear policies Customer confusion
Late order updates Lost trust
No plan for high demand Missed sales
Inefficient order system Slow fulfillment

Ways to Solve Issues

To fix backorder and pre-order problems:

Solution Benefit
Use good order software Handle more orders
Make clear policies Set right expectations
Update customers often Keep customers informed
Offer wait-time rewards Keep customers happy
Check and improve often Find ways to get better

Real-Life Success Stories

Some businesses have done well with backorders and pre-orders:

Business What They Did
Amazon Used smart order software
Apple Made clear pre-order rules
Walmart Kept customers updated
Best Buy Gave rewards for waiting

These companies show that good backorder and pre-order management can work well.

What's Next for Order Management

New Tech on the Horizon

Order management is changing with new tools that help stores handle orders better. These tools can:

  • Make shipping faster
  • Help stores know where items are
  • Let customers track their orders easily

Many people want their items quickly. Stores need to use these new tools to keep up.

What Customers Will Want

Customers will expect more from stores in the future:

Customer Expectation What It Means for Stores
Fast delivery Send items out quickly
Order updates Tell customers where their items are
Easy ordering Let people buy from anywhere

Stores need to talk to customers often about their orders to keep them happy.

What Experts Think Will Happen

People who know a lot about order management say:

  • Stores will need to use new tools to keep up with what customers want
  • Stores will have to find ways to send orders from different places, like websites and stores
  • Being good for the earth will matter more when sending orders

Stores that use these new ideas will do better in the future.


Main Points to Remember

Good backorder and pre-order management helps online stores keep customers happy and make more money. Here are the key things to remember:

Area What to Do
Policy Make clear rules for backorders
Communication Keep customers updated often
Data Use Look at sales info to guess what people will buy
Customer Care Give other choices or rewards for waiting
Suppliers Work well with people who make your products
Checking Keep looking at how things are going and make them better

Closing Thoughts

Managing backorders and pre-orders is not a one-time job. It needs constant work to get better. By using the tips in this guide, stores can:

  • Make customers want to come back
  • Sell more
  • Do better than other stores

Remember these key points:

Focus Area Action
Customers Keep them happy
Talking Be open about what's happening
Tools Use new tech to help


What is the difference between a backorder and a pre-order?

Backorder Pre-order
For out-of-stock items For unreleased items
Customer buys now, gets later Customer buys early, gets on release
Helps manage current inventory Helps plan future inventory

What does backorder mean on an order?

When an item is on backorder:

  • It's out of stock now
  • The store expects to get more soon
  • You can still buy it
  • The store will send it when they have it

What is the difference between pre-order and order?

Pre-order Regular Order
For items not yet available For items in stock
Placed before release Placed anytime
May have longer wait times Usually ships quickly

How do you handle backorders?

To manage backorders well:

  1. Choose which items to backorder
  2. Guess how many people will want them
  3. Update your website
  4. Work with many suppliers
  5. Keep customers informed
  6. Keep good records
  7. Ship items as they come in
  8. Find out why you run out and fix it

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