backorder

Backorder is a status assigned to a product that is not currently in stock but has been ordered and will be fulfilled at a later date when inventory becomes available. In retail and manufacturing, backorders occur when demand for an item exceeds the current stock level, or when supply chain issues delay replenishment.

Typically, a retailer or manufacturer will accept the order and provide an estimated delivery date or a range. The customer may be asked to wait or choose an alternative product or cancel.

Backorder fulfillment depends on replenishment lead times, supplier lead times, and production schedules. Reasons include high demand, supplier outages, production delays, or allocation decisions when capacity is constrained.

Key performance measures include fill rate (the proportion of orders or items filled on the first shipment) and backorder rate (the proportion of orders that are backordered). Firms manage backorders with safety stock, better forecasting, and vendor-managed inventory. In some cases, products are shipped in partial shipments, or substitutions are offered.

Communication is important: clear ETA, options to cancel, or to be notified when stock arrives.

Impact: for customers, uncertain delivery; for sellers, potential loss of sales, customer dissatisfaction, increased logistics complexity. Some jurisdictions require disclosures or limit backorder terms in sales agreements.

Minimization strategies: improving demand forecasting, increasing visibility with suppliers, securing alternative suppliers, prioritizing high-margin items, implementing pre-orders, and using drop-shipping to fulfill backordered items.