A backorder is a customer order accepted and recorded for a product that is currently out of stock, with the commitment to ship it once replenishment arrives. In inventory management for e-commerce, a backorder lets a store keep selling through a stockout instead of hiding the product or showing it as unavailable.
Backorders turn a temporary shortage into deferred revenue rather than lost revenue, but they also create an obligation: the merchant must know when new stock will arrive, communicate that date honestly and fulfill orders in a fair sequence. Handled poorly, backorders lead to cancellations, complaints and payment disputes.
How a backorder works
A backorder starts when available inventory reaches zero but the product is configured to remain purchasable. The store accepts the order, marks it as backordered and records the quantity as negative available stock or as a separate backorder quantity, depending on the system.
When a supplier delivery is received, the warehouse or order management system allocates the incoming units to waiting orders, usually in order-date sequence, before any new stock becomes available to other shoppers. Payment handling varies: some stores charge immediately, others only authorize the card and capture when the item ships.
| Stage | System status | Customer communication |
|---|---|---|
| Order placed | Backordered, quantity reserved | Confirmation with expected ship date |
| Supplier order confirmed | Incoming stock linked to order | Optional update if the date changes |
| Stock received | Units allocated to waiting orders | Shipping notification |
| Order shipped | Fulfilled, backorder closed | Tracking details |
Backorder compared with related inventory states
Backorders are often confused with pre-orders, dropshipping and simple stockouts. They differ in whether the product has been sold before and in who holds the inventory, as the comparison shows.
| Situation | Product status | Order accepted | Typical cause |
|---|---|---|---|
| Backorder | Normally stocked, temporarily out | Yes, ships later | Demand above forecast or supplier delay |
| Pre-order | Not yet released | Yes, ships at launch | New product launch |
| Stockout without backorder | Out of stock | No | Merchant blocks sales |
| Dropshipping | Held by a supplier | Yes, supplier ships | Business model choice |
| Made to order | Produced after purchase | Yes, ships after production | Customized goods |
The key distinction is that a backorder is a deviation from normal availability. A pre-order is planned from the start, while a backorder signals that inventory planning, safety stock or supplier lead times did not match actual demand.
When to allow backorders
Allowing backorders is a product-level policy decision. It makes sense when replenishment is reliable and customers are willing to wait, and it is risky when the restock date is unknown or the product has many close substitutes.
| Situation | Recommendation | Reason |
|---|---|---|
| Confirmed restock within days | Allow backorders | Short, credible wait keeps the sale |
| Unique or exclusive product | Allow with a clear date | Few alternatives, high willingness to wait |
| Commodity with many substitutes | Usually block | Shoppers buy elsewhere and cancel |
| Unknown supplier date | Block or collect interest | Promises cannot be kept |
| Discontinued item | Block | No replenishment is coming |
Many platforms let merchants set backorders per product or per variant and add a maximum backorder quantity. Limiting the quantity to what is already confirmed on an inbound purchase order prevents promising more units than will actually arrive.
Managing backorders operationally
Effective backorder management connects storefront, inventory and purchasing data. The expected ship date shown to customers should come from confirmed supplier information plus the warehouse’s own receiving and processing time.
- Display the expected ship date on the product page and at checkout, not only after purchase.
- Allocate incoming stock automatically to backorders in a defined priority order.
- Send updates when dates change, before the customer has to ask.
- Offer a simple cancellation path for customers who no longer wish to wait.
- Track backorder rate and age as indicators of forecasting and supplier performance.
Split shipments are a common side effect: when an order contains one backordered item and several items in stock, the merchant must choose between shipping available items first or holding the whole order. Shipping separately pleases customers but raises shipping cost per order.
Backorder data also feed demand forecasting. Orders taken during a stockout reveal demand that sales history alone would understate, so planners should include backordered quantities when they recalculate the reorder point and safety stock for the next cycle.
Risks and common mistakes
Backorders become harmful when the merchant loses control of the promise. The table lists typical mistakes, their consequences and practical remedies.
| Mistake | Consequence | Remedy |
|---|---|---|
| Hidden backorder status | Customers feel misled | Show status before checkout |
| Overselling incoming stock | Second wave of delays | Cap backorders at confirmed inbound quantity |
| Charging long before shipping | Disputes and chargebacks | Authorize first, capture at shipment |
| No date updates | Rising service contacts | Automated delay notifications |
| Ignoring marketplace rules | Penalties or suspended listings | Follow each channel’s handling-time rules |
Card authorizations also expire after a limited period, often around seven days, so long backorders may require a new authorization or an immediate charge. Payment and consumer protection rules in each market should be checked before setting the policy.
Understanding it simply
A backorder means buying something that is sold out right now and waiting for it. The shop takes the order, reserves a place in the queue and ships the item when new stock arrives.
It is like ordering a popular bicycle that the shop has to bring in from the factory. The key is an honest delivery date. Customers usually accept a short wait when they know about it in advance.
Applied in practice
An online outdoor store sells a popular hiking backpack that sells out three weeks before a holiday weekend. A replenishment of 400 units is confirmed by the supplier and expected in ten days. Instead of hiding the product, the store enables backorders, capped at 400 units, and shows an expected ship date of twelve days.
The checkout displays the date clearly, cards are only authorized and an automated email confirms the backorder. When the supplier shipment is delayed by three days, the system sends updated dates to all waiting customers and offers one-click cancellation.
The store keeps about 350 orders that would otherwise have been lost, with only a small share of cancellations. The buying team then raises the backpack’s safety stock for the next season, because the backorder data reveal demand that the forecast had underestimated.