Backorder Management Series

What is a backorder?

Backorders are sales orders for out-of-stock or pre-sold products. Sometimes backorders occur because you've accidentally oversold, while other times you may intentionally plan a sales period to accept preorders and backorders on products expecting to be received soon.

How to accept preorders and backorders

Many sales channels feature options to allow sales orders for out of stock or pre-sale products and simple communication options for backorders. Others, such as Amazon, feature ways to set explicit restock dates and quantities in advance. It's always best to start there.

Identifying backorders in SKULabs

SKULabs has simple but powerful features to help identify backorders and control when they appear for fulfillment by your team.

Purchasing for backordered inventory

Use our simple tools to seamlessly and accurately purchase backorder inventory.

How to manage backorder fulfillment

Ship fulfillable orders first

The simplest approach to any fulfillment policy is grouping your list of orders and prioritizing simple, ready to ship orders first, before moving on to complex orders requiring one or multiple backordered products.

  1. Adjust your filters to only show "fulfillable" orders.

  2. Sort by "order date" or "ship by date" columns to prioritize shipping your oldest orders first.

  3. Once fulfillable orders are completed, you're ready to move on to handling backorders.

Simple backorder fulfillment (recommended)

Partially ship backorders when inventory is available

  • Assumes you have regular access to inventory to account for any unusual cases.

  • Does not require prioritizing one order over another 100% of the time.

  • Overhead costs are almost non-existent with this method.

SKULabs supports creating multiple partial shipments on the same order, allowing you to fulfill backorders by shipping any available items today, then shipping the rest when the unavailable products come back into stock.

Process

  1. Adjust your filters to show "partially fulfillable" orders.

  2. Sort by "order date" or "ship by date" columns to prioritize your oldest orders first.

  3. Open a partially fulfillable order and verify all the items you currently have in stock, then add a shipment to the order to automatically set its status to "Partially shipped". Note: some sales channels will notify customers on partial shipments. Learn how to adjust your store's channel notification settings here.

  4. Purchase backorder inventory for any partially shipped orders.

  5. When you receive inventory on POs, stock will be replenished and orders will become fulfillable for processing by your fulfillment team.

Complex backorder fulfillment

Partially pick-and-stage backorders for single shipment fulfillment later

  • Emphasizes POs directly linked to specific orders and hard allocation of stock when orders will wait until they are ready to ship.

  • Requires a strategy to prevent products from becoming unavailable when it comes time to fulfill orders, especially if you would prefer to have inventory sit on the shelf rather than go out to customers out-of-order.

  • Typically high overhead, cumbersome to operate, and incompatible with sales channels that have strict seller performance guidelines.

If you delay orders so you can fulfill them in a single shipment, your goal will be to partially pick, organize, and store backorders, then fulfill them completely later once out of stock products become available.

Prepare

  • First, you'll need to deduct on-hand counts while picking available products. This helps allocate stock to orders still waiting to receive backordered products. Stock can be deducted in a number of ways, including adding manual shipments or scan deduction.

  • Next, it's best to dedicate a space in your warehouse to physically store partially picked backorders. This prevents accidental over-picking on other orders for the same product. Consider storing backorders waiting for the same products in the same area and use separate containers for each backorder to prevent inventory mix up between orders

Process

  1. Tag orders by PO# so you know which ones to process once the PO is received and they become "fulfillable".

  2. Pick any currently available order items.

  3. After picking, place an order identifier, such as a packing slip, with the container to easily identify the order later, then physically set the order aside.

  4. Once the out of stock products are received, pick the remaining items and ship the whole order together.

Handling accidental backorders

When dealing with accidental backorders, you may choose to edit, cancel, or exchange items to keep your customers happy and your process simple.

Refund or replace the order

  • Fully refund the customer who placed the order and cancel the order.

  • Partially refund the order and fulfill only the currently available products.

  • Exchange - Offer your customer exchange alternatives in place of the unavailable products. SKULabs automatically imports order edits made on your store, or you can edit the order in SKULabs for channels which don't support order edits like Amazon/eBay.

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