With the supply chain, backorders are items that are not readily available but have a certain expected replenish date and that the item is expected to continue passing through. Simply put, it means an order for a good, material, or service that cannot be filled due to a lack of supply. It can absolutely affect the supply chain depending on where the issue is.
Why does backorder happen?
Backorders are very common in inventory management. This sets them apart from discontinued inventory and just-in-time inventory. And here’s some reason why this happens:
Unexpected demand: In some instances, demand for a product cannot be predicted and it will lead to the scarcity of the stock. This can be affected by seasonal happenings wherein e-commerce businesses do not expect a big demand on an item that was not usually sold, eventually leading to backorders.
Low safety stock: Safety stock, from the word itself, is the additional quantities of inventory for a safety net, which will prevent going out of stock in case of emergencies. In connection with the first reason, with an increase in the demand not predicted, together with very low safety stock, this will surely cause the orders to fall as backorders.
Supplier issue: Problems with the suppliers can also happen at times, specifically when they run out of materials to produce the needed number of items. They will be needing additional time to hit the productions goals.
How to prevent losing customers due to backorder
Losing a customer is surely something an e-commerce business would like to happen, and taking actions for backorder instances will help secure their loyalty.
Notifying customers proactively: Alerting the customer onset about the item being not available at the time of the purchase is a must for proper settings of expectations about the shipping date. You may also include the reason for the backorder so customers can fully understand what is happening.
Providing an update regarding item replenishment and Estimated Time of Arrival (ETA): Aside from giving them the head’s up of what is happening, e-commerce businesses should not forget to provide helpful details about the estimated time of the replenishment of the stocks so customers will have an idea on when to expect the orders.
Being able to get the correct information regarding backorders is really important, and with Chicago Shipper’s customer care, you will be able to secure time-to-time updates about your orders and make the whole shipping process less of your worries.