What is a backorder? Meaning, causes and how to manage one

A backorder is an order a customer has placed for something you cannot ship yet because it is out of stock. You have accepted the sale and promised to deliver once new stock arrives. It differs from a stockout, where the product simply cannot be bought.

Key takeaways

• Backorders preserve the sale but add waiting time and cancellation risk.
• They should be visible to purchasing so the next order covers them.
• Be honest about dates. A vague "ships soon" generates support emails and refunds.
• Frequent backorders signal a reorder point or lead-time problem.

Why backorders happen

• Demand spiked above forecast, for example after a promotion or a viral mention.
• A supplier delivery was late or short.
• The reorder point was too low for the real lead time.
• Stock was available in one location but not where it was needed.
• A product is made to order or imported in batches, and selling ahead is deliberate.

Should you allow backorders?

It depends on how loyal your customers are to the product and how long the wait is. Allow them when the product is distinctive and the delay is short and certain. Block them, and show "out of stock" with a notification option, when the wait is long or uncertain, or when the cost of cancellations is high.

If you do allow them:

• Show an expected ship date on the product page and in the order email.
• Offer cancellation without penalty.
• Take payment at the time that suits your policy and local consumer rules.
• Ship partial orders only if the customer agrees; extra shipping costs add up.

Backorders and planning

Backorders are demand. If you count only shipped units, your history understates what customers wanted. Treat the days a product could not be bought as missing data in your forecast, not as zero demand, and count backordered units against the next purchase order. See stockouts and lost sales.

Your inventory position should subtract backordered quantity, so the reorder point fires earlier. A rising backorder count is the signal to check safety stock and supplier lead times: see what is safety stock.

How Stokrio helps

Stokrio treats stockout days as missing demand in its forecasts, warns of upcoming stockouts and late purchase orders through inventory alerts, and shows revenue at risk in the stockout risk report.