The Ultimate Guide to Preventing Backorders and Boosting Sales
Are you frustrated by the constant struggle with backorders? Looking for proven methods to not only prevent but also manage them efficiently? You're in good company. In this comprehensive guide, we'll delve into what backorder means, why they occur, and how you can avoid them. We'll also provide actionable steps to solve them if they do happen.
So, let's dive in. And remember, if you need expert advice on managing your eCommerce logistics, don't hesitate to speak to an expert.
What Does Backorder Mean?
The term "backorder" refers to a specific inventory status. It signifies that a product is currently unavailable in the warehouse but is still open for customer orders. Unlike an "out of stock" status, where the item is temporarily removed from the sales platform, a backordered article remains listed, allowing customers to proceed with their purchase. However, there's a caveat: they must be willing to wait for an unspecified period until the product is restocked and ready for dispatch.
Backorder vs Out of Stock: A Tabular Comparison
Why Do Backorders Happen?
Here are the key factors that often lead to items being backordered, offering insights to help you proactively manage this challenging aspect of eCommerce:
In some instances, a product's popularity can outpace the company's ability to keep it in stock. This can happen during promotional events, seasonal spikes, or when an item gains sudden social media attention. While high demand is generally a positive indicator of a product's market fit, it can also lead to backorders if the inventory isn't adequately prepared to meet the surge.
Supply Chain Issues
The unavailability of items can also be a consequence of disruptions in the supply chain. These inefficiencies can range from manufacturing delays and shipping bottlenecks to geopolitical factors affecting international trade. For instance, a delay at a port due to customs issues can set off a chain reaction, causing the product to be backordered. Understanding the intricacies of your supply chain, including the lead-in time, can help you anticipate and mitigate these types of issues.
Poor Inventory Management
Inadequate inventory management systems can also be a significant contributor. Without real-time tracking and analytics, it's challenging to maintain an accurate understanding of inventory and fulfilment status or to replenish stock adequately. This lack of information can result in selling products that are not immediately available, thereby automatically placing them on backorder.
Understanding the Impact of Backorders on Your Business
Backorders can have far-reaching implications that extend beyond immediate revenue loss. When a customer discovers that their desired item is unavailable after placing an order, not only is there a risk of them cancelling it, but they may also opt for a competitor who can fulfil their needs instantly. This scenario results in immediate lost sales and also jeopardises long-term customer loyalty.
Moreover, backorders can tarnish a company's reputation, particularly in the age of social media, where negative experiences can be shared widely and quickly. Consumers have grown to expect swift and reliable delivery; any deviation from this standard can lead to customer dissatisfaction. This can manifest in poor reviews and reduced repeat business, affecting the company's credibility and bottom line in the long run.
How to Avoid Backorders
For a robust approach to avoiding backorders, it's essential to consider a range of strategies. In this section, we'll explore tactics that can fortify your operations and reduce the risk of items becoming unavailable.
Real-Time Inventory Tracking
Utilising a real-time inventory tracking system allows you to instantly monitor stock levels across various locations. This is particularly beneficial for businesses operating in multiple countries.
With such data at your fingertips, you can make informed decisions about when to reorder merchandise.
Monitoring and analysing historical sales data can provide invaluable insights into future demand. Seasonal trends, promotional events, and market shifts can all be accounted for in your forecasting model. This isn't a one-time activity but requires ongoing adjustments to adapt to industry changes and customer behaviour.
Open and frequent communication with your suppliers can provide you with crucial information, such as potential delays or changes in lead times. Such close collaboration allows for more effective planning and quicker response times when issues arise.
Maintaining a buffer stock acts as a safety net for your best-selling items. This is especially crucial during peak seasons or promotional events when demand can rise unexpectedly. This stock should be strategically allocated based on sales data and predictive analytics, ensuring that you're safeguarding the right products.
Automated Reordering Systems
Implement an automated system that triggers a reorder based on predefined stock levels. This ensures that you never run too low on essential items. Some inventory management software can also communicate directly with suppliers, streamlining the entire process.
Diversified Supplier Network
Relying on a single supplier can be very risky. Diversifying your network can provide alternatives if one distributor faces delays. This can also give you better negotiation power, potentially leading to more favourable terms and faster lead times.
How to Solve Backorders
Below, we explore a comprehensive set of strategies that go beyond the basics, offering you actionable steps to effectively resolve backorders and maintain customer trust.
As soon as you're aware that an item is backordered, notify the customer. Use multiple channels like email, SMS, or even a phone call to ensure the message is received. Provide regular updates about the status of their order, including estimated restock dates and expected delivery times. This helps manage customer expectations and reduces uncertainty.
Offer a selection of similar or complementary products that are available for immediate dispatch. Make sure these alternatives match the quality and price range of the backordered item. To encourage customers to opt for the alternative, consider offering a small discount or free shipping. This not only solves the immediate issue but also fosters goodwill.
Engage with your suppliers to expedite the manufacturing or shipping process. This may involve additional costs but can be weighed against the potential loss of sales and customer trust. Once the backordered stock arrives, give priority to fulfilling these orders. This may require coordination with your warehouse team to ensure that these items are processed as quickly as possible.
Dynamic Order Routing
If you operate numerous warehouses, consider routing the order to another location where the item is available. This is particularly useful for businesses operating in multiple countries. In some cases, it might be possible to have the supplier ship the product directly to the customer to facilitate delivery.
Customer Retention Efforts
Offer loyalty points or future discounts to customers willing to wait for their items. This not only retains the sale but also encourages future interactions. As highlighted above, a personalised email or even a phone call can go a long way in retaining trust during a backorder situation.
Risk Assessment and Mitigation
Regularly review what items are frequently backordered to identify any patterns or trends. This data can be used to improve inventory planning. Evaluate and possibly adjust your cancellation policies to be more flexible during such situations, making it easier for customers to change or cancel orders if they prefer.
Why Choose Bezos for Avoiding and Solving Backorders?
When it comes to avoiding and solving backorders, Bezos stands as a game-changer in the eCommerce fulfilment landscape. Operating across key markets like the UK, Australia, New Zealand, and throughout Europe, we offer a full-service fulfilment solution that addresses all your concerns and pain points. Imagine saving one to five hours a day on logistics tasks alone, freeing you to focus on product development or marketing.
We employ real-time order tracking and offer complete visibility of all your orders through a single, intuitive portal. This feature is crucial for accurate forecasting, helping you anticipate potential backorders and avoid them in time. With Bezos, you're not just outsourcing logistics; you're gaining a team that includes a warehouse, stock, and dedicated account manager who responds to tickets within two hours.
But that's not all. Bezos is integrated with over 30 eCommerce platforms, offering green, sustainable delivery options. Our proprietary AI technology identifies and resolves logistics issues before they become your headache. And with fulfilment centres worldwide, we ensure that you can expand your business internationally with confidence.
Ready to take your business to the next level and say goodbye to backorder woes? Start saving now with Bezos.
In the fast-paced world of online business, backorders can be a significant stumbling block, affecting not just immediate sales but also long-term customer loyalty and brand reputation. As we've explored, understanding their root causes and impact is the first step in effectively managing them. From implementing real-time inventory tracking systems to maintaining open lines of communication with suppliers, there are multiple strategies to both avoid and solve this issue.
Additional tactics like automated reordering systems, diversified supplier networks, and customer retention efforts can further fortify your business against the challenges it poses. Moreover, when it comes to practical solutions for avoiding and resolving backorders, Bezos offers a comprehensive, full-service fulfilment solution that can transform your eCommerce operations. With real-time tracking, dedicated account management, and proprietary AI technology, we provide the tools you need to not just survive, but thrive in today's competitive market.
Ready to eliminate backorders from your business equation? Get your free quote from Bezos today.