When a customer orders a product that isn't currently available, businesses can cancel the order, offer an alternative, or fulfill it when more inventory arrives.

That third option is called a backorder. While backorders allow businesses to continue accepting orders during temporary inventory shortages, they also create additional responsibilities for inventory management, order fulfillment, and customer communication.

Understanding how backorders work can help ecommerce, retail, and wholesale brands manage inventory shortages without unnecessarily losing sales.

What Is a Backorder?

A backorder is an order for a product that is temporarily unavailable but is expected to be restocked and shipped at a later date.

Instead of canceling the order, a business accepts it and fulfills it once additional inventory becomes available.

For example, if a customer purchases an item that is currently sold out but expected to arrive next week, the business may place that order on backorder.

Backorders are common when demand exceeds available inventory, supplier shipments are delayed, or products sell faster than anticipated.

How Do Backorders Work?

The backorder process typically involves four steps:

A product becomes unavailable. Customer demand exceeds available inventory, or an expected replenishment shipment is delayed.
The business accepts a backorder. The customer is informed that the product is temporarily unavailable and given an estimated shipping date when one can be provided.
Inventory is replenished. Additional products arrive from a supplier or another inventory location.
The backorder is fulfilled. Once the inventory is received and available, the outstanding order is processed and shipped.

Businesses must track backordered quantities separately from inventory available for new orders to avoid promising the same incoming stock to multiple customers.

Backorder Example

Suppose an outdoor equipment retailer receives customer orders totaling 150 camping chairs but only has 100 units available.

The retailer ships the first 100 chairs and accepts backorders for the remaining 50 units, with customers informed of the delay.

When the next shipment arrives, those 50 outstanding units are allocated to the backorders before being made available for new sales.

This allows the retailer to retain potential sales while managing a temporary inventory shortage. However, the business must keep customers informed if the expected replenishment date changes.

Backorder vs. Out of Stock: What's the Difference?

Although the terms are closely related, backorder and out of stock do not mean the same thing.

Backorder	Out of Stock
An accepted order awaiting inventory	A product with no available stock
The business has agreed to fulfill the order later	The business may or may not accept new orders
Replenishment is expected	Restock timing may be known or unknown
The customer is waiting for fulfillment	A customer may not have placed an order

A product can be out of stock and still available for backorder.

For example, an ecommerce store might display a product as "Out of Stock" and prevent purchases. Another store might allow customers to purchase that same unavailable product with a notice that it will ship when inventory arrives.

The difference is whether the business accepts an order for future fulfillment.

What Causes Backorders?

Backorders can occur for several reasons:

Unexpected demand: Promotions, seasonal peaks, or sudden increases in sales can deplete inventory faster than anticipated.
Supplier delays: Manufacturing issues, transportation disruptions, or longer lead times can delay replenishment.
Inaccurate inventory records: Differences between recorded and available stock can cause businesses to accept orders they cannot immediately fulfill.
Insufficient safety stock: Without an appropriate inventory buffer, unexpected demand or delays can quickly create shortages.
Replenishment problems: Ordering too late or failing to account for supplier lead times can leave products unavailable.

Identifying the cause of recurring backorders helps businesses determine whether they need to adjust purchasing schedules, demand forecasts, or inventory processes.

How to Manage and Reduce Backorders

Backorders aren't always avoidable, but businesses can take practical steps to reduce their frequency and minimize disruptions.

Maintain Accurate Inventory Records

Reliable inventory data helps businesses distinguish between available stock, inventory already committed to orders, and incoming replenishment shipments.

Monitor Reorder Points

Reorder points help businesses determine when additional inventory should be purchased based on demand, supplier lead times, and safety stock.

A consistent stock replenishment process can help reduce shortages caused by late purchasing decisions.

Communicate Clearly with Customers

Customers should know when a product is backordered, when it is expected to ship, and what options are available if delays occur.

Clear communication helps businesses manage expectations and reduce uncertainty.

Prioritize Outstanding Orders

When new inventory arrives, businesses should have a clear process for allocating stock to existing backorders before making it available for additional sales.

This helps prevent new orders from consuming inventory already committed to waiting customers.

Review Recurring Inventory Shortages

Products that frequently go on backorder may indicate problems with demand forecasting, supplier reliability, or replenishment planning.

Reviewing these patterns can help businesses make more informed inventory decisions.

How Do Backorders Affect Order Fulfillment?

Backorders can introduce additional complexity into warehouse and fulfillment operations.

When products are unavailable, outstanding orders must be tracked until replenishment inventory arrives. Depending on the business's fulfillment policies, backorders may also require split shipments, additional handling, or changes to shipping schedules.

Accurate receiving and inventory updates help warehouse teams identify when replenished products are ready to fulfill outstanding orders.

However, reducing backorders requires coordination between purchasing, inventory planning, and fulfillment. Warehouse operations support the process, but they cannot independently prevent shortages caused by supplier delays or purchasing decisions.

Supporting Inventory Management with Fast Fulfillment

As brands grow across ecommerce, retail, and wholesale channels, maintaining accurate inventory records and organized fulfillment operations becomes increasingly important.

Fast Fulfillment provides warehousing, inventory management, and order fulfillment services to help growing brands manage inventory and process customer orders efficiently.

With organized storage, accurate receiving, and inventory visibility, businesses have better information to support replenishment planning and fulfillment decisions.

What Is a Backorder? Meaning, Examples & How to Manage Them