Backorder Meaning: How to Optimize Your Inventory Management

Have you ever experienced a shortage of products when you are in urgent need of them and buy them online or offline? Have you ever waited for long-expected gifts or the newly launched smart speaker?

Chinadivision helps you manage inventory safely and efficiently

I have. When I bought a newly launched iPhone13 online, I have waited for more than twenty days until I received the amazing smartphone. I almost went to check the order status on my phone everyday to know whether it was shipped and where it was. I still remember how excited I was when I opened the box and took out the brand new iPhone.

Long waiting is really a torment, but sometimes it is inevitable. Sometimes the products are out of stock, and sometimes the shipping is delayed due to bad weather or port congestion.

As the need of ecommerce shopping rises rapidly, hot-sale products are out of stock now and then when we buy them online. Then we certainly leave that page and go to another online store to buy a similar product or just buy nothing. What can the sellers do to gain the possible sales when some of products are out of stock?

They can mark the items as backorders rather than out of stock. Why?

What Does Backorder Mean?

Backorder or back order means that stock is unavailable at present but they are going to be in stock soon. Backordered products are ordered by the manufacturer but they have not been produced. People can place an order when the SKU of a product reads “on backorder”, but they can not be fulfilled until they are produced and in stock. However, if the SKU of the product is displayed as “out of stock”, people can not place an order, so that the sellers will lose the potential customers.

Backorders work for some businesses which sell unique and well-known products, such as iPhone and Nike, as people are willing to wait for the product rather than buy a similar product.

How to Optimize Your Inventory Management

Inventory management refers to the purchasing, storing and sale of inventory. Only when the inventory is sold, the business gets revenue. Inventory are stored in the warehouses so that when the customers place orders online, they can be picked, packed and shipped to the customers in the shortest time.

Inventory turnover is often used to measure whether the inventory management is good or not. Good inventory turnover brings more cash flow while poor inventory turnover leads to deadstock or unsold stock. Good inventory turnover can lower the costs of keeping too much inventory and deadstock.

In order to optimize your inventory management, your business should have an efficient inventory management system to record the stock of items, give alert in a shortage of stock and track trends of hot-sale items and less popular products which often change according to the needs of the consumers.

Chinadivision’s Customized Warehouse Management System

chinadivision’s customized Warehouse Management System (WMS) records your product weights and dimensions. And your products are stored in an organized, proper and well-marked manner in chinadivision’s large warehouse, providing you with real-time inventory management and keeping you informed of the inventory status, including alerts for low inventory, in order to better prepare you to grow your business.

chinadivision keeps your inventory organized and well-marked

Backorder happens sometimes, as the supply and demand is not in balance. What is need to be done is to optimize inventory management to reduce the possiblity of being out of stock.

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