A customer enthusiastically orders a product from your webshop, and three days later receives an email stating that the item is out of stock after all. Frustrating for the customer, damaging to your reputation, and often expensive as well. Preventing backorders in your webshop is therefore not a nice-to-have, but an operational priority. In this article, you will read where backorders come from and what concrete measures you can take to structurally reduce them.
What are backorders and why are they a problem
A backorder occurs when a customer places an order for a product that is currently out of stock but can be ordered. The customer pays, receives an order confirmation, and then waits for delivery as soon as stock is back in. The product therefore remains visible and orderable in the webshop, even though it is not on any shelf.
Backorder vs. stock shortage: the difference
The difference compared to a regular stock shortage lies in the visibility to the customer. With a stock shortage, you take the product offline or clearly display "out of stock," preventing the customer from placing an order. With a backorder, the order button remains active, and the customer is only confronted with the delay after purchase. The latter is riskier for the customer experience because the expectation (fast delivery) does not match reality.
The hidden costs of backorders
Backorders cost more than just an unsatisfied customer. Consider:
- Cancellations and chargebacks, with extra administrative hassle.
- Negative reviews that scare away new customers.
- Additional customer service contacts to explain status and delivery time.
- Discount codes or free shipping as compensation, which directly impacts your margin.
- Loss of trust, causing customers to go to a competitor sooner for their next purchase.
Warning: Do not underestimate the hidden costs. A customer who has experienced a backorder disappointment once is more likely to check a competitor's stock first when placing a subsequent order.
The most common causes of backorders
Backorders rarely occur by chance. Usually, there are structural processes behind them that lead to the same error time and again.
Inventory inaccuracy as the main cause
The biggest culprit is inventory records that do not match reality. This is caused by manual Excel entries, outdated systems that do not update in real time, or simply human error when counting and booking inventory. If your system says there are 12 items left, while in reality there are 3 on the shelf, a backorder is only a matter of time.
Multichannel sales without central inventory control
If you sell through multiple channels, such as your own webshop, Bol.com, Amazon, and perhaps a physical store, central inventory control is essential. Without real-time synchronization between channels, you sell the same item twice: once on the marketplace and once in your webshop, while only one piece is in stock.
Other common causes are:
- Poor forecasting, where seasonal peaks, Black Friday promotions, or influencer campaigns are not included in the purchasing plan.
- Excessively long lead times at suppliers, without a buffer for delays.
- Human errors when counting, scanning, or booking goods received.
Prevent backorders with smart forecasting
Good forecasting is the foundation of any strategy to prevent backorders in your webshop. You don't want to react to a shortage, but predict it before it happens.
Use historical sales data to identify patterns: which products consistently sell well, and which peaks do you see recurring around specific months or holidays? Combine this with planned marketing actions. A product launch or discount promotion without stock increase is a direct invitation to backorders.
How to calculate safety stock
Safety stock is the buffer you maintain to absorb fluctuations in demand and lead times. A commonly used formula:
Safety stock = (Maximum daily sales x Maximum lead time) – (Average daily sales x Average lead time)
If you sell an average of 10 units per day with a lead time of 7 days, but demand can rise to 18 units per day and the lead time to 10 days, then you calculate: (18 x 10) – (10 x 7) = 180 – 70 = 110 units of safety stock.
Applying ABC analysis to your product range
Not every product deserves the same attention. With an ABC analysis, you divide your assortment into:
| Categories | Characteristic | Attention level |
|---|---|---|
| A-items | High turnover, high sales frequency | Accurate forecasting, high safety stock |
| B-articles | Average revenue and frequency | Periodic check, moderate buffer |
| C articles | Low turnover, occasional sales | Minimal buffer, reactive reordering |
This way, you prevent your capital from being tied up in slow-selling C-items, while your most popular products have insufficient buffer.
Tip: Review your ABC classification every quarter. Products shift categories due to seasonal influences or trends, and an outdated classification actually leads to new backorders.
Real-time inventory management as the key to fewer backorders
Forecasting determines how much you purchase, but real-time inventory management determines whether your sales channels truly align with physical reality.
Cycle counting: counting more frequently and accurately
Instead of shutting down the entire warehouse once a year for a full count, you work with cycle counting: you continuously count small, varying parts of your inventory. For example, you count A-items weekly, and C-items monthly or quarterly. This keeps your inventory records continuously up-to-date, instead of having a snapshot once a year. You can read more about this in this article on cycle counting versus annual inventory.
Why real-time data is crucial during peak moments
During peaks like Black Friday or the month of December, your inventory sometimes changes by the minute. Without real-time synchronization between the warehouse and the webshop CMS, you run the risk of receiving ten orders for an item of which only three are left in stock. Barcode scanning and RF scanners drastically reduce errors because every incoming and outgoing movement is captured immediately, instead of being manually entered afterwards. If you want to get started with this, implementing barcode scanning in the warehouse is a logical first step.
The role of a WMS in preventing backorders
A warehouse management system (WMS) automates what always remains manual work in a spreadsheet. Every receipt, movement, and delivery is automatically recorded, ensuring your inventory levels continuously match reality.
What a WMS does differently from a spreadsheet
A spreadsheet is static: someone has to update it, and errors easily creep in. A WMS works with real-time data and provides insight into three layers of inventory:
- Available stock: what you can actually sell right now.
- Reserved stock: what is already linked to open orders.
- Incoming stock: what is on its way from your supplier.
Without this distinction, you run the risk of displaying “available” stock that is actually already reserved for another order. You can find more background on this in the article what is a WMS.
Integration between WMS and your webshop platform
A WMS connects directly to your webshop platform (such as Shopify, WooCommerce, or Magento) and marketplaces. As soon as stock reaches the reorder point, you automatically receive an alert to reorder, even before you actually run out of stock. Lyra WMS, for example, synchronizes stock levels in real-time across all your sales channels, ensuring you never sell more than you can actually deliver. Curious which functionalities help with this? Check out the Lyra WMS features.
Optimizing supplier management and purchasing strategy
Even with perfect forecasting and real-time inventory data, you will run into backorders if your purchasing strategy is not in order.
Multiple suppliers as risk diversification
If you work with only one supplier per product, you are vulnerable to delays, production problems, or bankruptcy. By working with multiple suppliers, you spread this risk. This does not necessarily mean that you purchase the same amount from every supplier: a primary and a secondary supplier per product category are often sufficient.
Aligning the purchasing cycle with your sales data
Align your purchasing moments with your sales forecasts rather than a fixed calendar. If you consistently sell a product faster in November and December, place an additional order well before that peak, allowing extra margin for delays in the supply chain.
Option 1 – fixed purchasing cycle: Works well with stable, predictable demand, but responds slowly to unexpected peaks. Option 2 – dynamic purchasing based on sales data: Requires more management, but structurally prevents backorders during fluctuating demand.
What you can do if a backorder is unavoidable
Despite all precautions, a backorder is sometimes unavoidable, for example due to an unexpected delivery delay from your manufacturer. At that moment, your communication determines whether the customer shows understanding or drops out.
Communication as the key to customer satisfaction
Be transparent about the expected delivery time as soon as you know a product is delayed. Send automatic email notifications for every status change so the customer does not have to inquire themselves. A customer who is proactively informed often accepts a backorder without hesitation, especially for popular or unique products for which they are willing to wait.
Offering alternatives without losing revenue
Where possible, offer a similar alternative product so that the customer is still helped without having to wait for the original order. In the event of longer delays, consider a small compensation, such as a discount code for a next order or free shipping. This costs little but keeps the customer relationship intact.
Tip: Develop a fixed script for your customer service for backorder situations. Consistent, empathetic communication prevents escalations and negative reviews.
If you want to delve deeper into the basics of your inventory management, also read these webshop inventory management tips for practical next steps.
Frequently asked questions
What is the difference between a backorder and a stock shortage?
In the case of a backorder, the customer can still order the product, even though the stock is at zero, resulting in a delayed delivery. In the event of a stock shortage, the product is no longer offered in the webshop until stock is available again.
How do you calculate the correct safety stock to prevent backorders?
You calculate safety stock based on your average demand, your supplier's lead time, and the desired service level. A simple formula is: (maximum daily sales x maximum lead time) minus (average daily sales x average lead time). This way, you build up a buffer that absorbs fluctuations in demand and lead time.
Which software helps prevent backorders?
WMS systems and inventory management software with real-time synchronization between sales channels are the most effective. They provide immediate insight into available, reserved, and incoming stock, and automatically send alerts when the reorder point is reached.
Are backorders always bad for the customer experience?
Not necessarily. With good, proactive communication and realistic delivery times, many customers accept a backorder, especially when it concerns popular or unique products for which they are willing to wait. The problem arises primarily when the customer is confronted with a delay only afterwards, without explanation.
How often should you count inventory to prevent backorders?
This depends on the category within your ABC analysis. Ideally, you count A-items with a high sales frequency weekly, B-items monthly, and C-items quarterly. This form of cycle counting keeps your inventory records continuously up-to-date, in contrast to a full annual count.
Would you like to know how to handle this in your warehouse? Schedule a no-obligation discovery call and we'll go through it together.
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