Allowing shoppers to backorder products can benefit your e-commerce store in several ways. Not to be confused with preordering, backordering involves a shopper purchasing an out-of-stock product. If you are planning to restock a product in the near future, you may want to allow shoppers to backorder it. You don’t have to remove the out-of-stock product from your online catalog, nor do you have to disable the add-to-cart functionality. What are the benefits of backorders for e-commerce stores exactly?
Eliminates Supply Chain Disruptions
You can eliminate supply chain disruptions by offering backorders. Unless you manufacture your e-commerce store’s products, you’ll probably have a partnership with one or more suppliers. Supply chains represent these partnerships.
Disruptions can occur in supply chains that leave your e-commerce store without inventory. It may take a supplier longer than expected to obtain the raw materials needed to manufacture a product, or the supplier may be experiencing delivery delays. By offering backorders, you can protect your e-commerce store from supply chain disruptions such as these. Shoppers can purchase products before your e-commerce store has restocked them.
Better Cash Flow
Offering backorders can improve your e-commerce business’s cash flow. Cash flow represents the net money entering and going out of a business. It can be positive or negative. Businesses with a positive cash flow have more incoming money than outgoing money. Businesses with a negative cash flow, on the other hand, have more outgoing money than incoming money.
For better cash flow, look no further than backorders. It can help you achieve higher positive cash flow for your e-commerce business. Each backorder placed by a shopper is new money coming into your e-commerce business. You won’t have to wait for suppliers to deliver units of out-of-stock products; you can sell them by offering backorders. It will improve your e-commerce business’s cash flow by driving more incoming money.
With better cash flow, you can grow your e-commerce store more easily. Growth requires a financial investment. You may need to invest in marketing, adding new products to your store’s inventory, and changing your store’s design. Positive cash flow represents a surplus of money. You can use some of this excess money to cover growth-related expenses such as these.
Preserves SEO
You can preserve your e-commerce store’s search engine optimization (SEO) by offering backorders. Some e-commerce stores take down pages for products that are out of stock. They temporarily remove those pages until they’ve restocked the products.
Even when removed for just a few weeks, though, product pages may suffer a loss of search engine rankings. They may rank lower, or the product pages may not rank at all. Offering backorders preserves SEO. You can keep pages for out-of-stock products up, resulting in more stable and consistent search engine rankings.
New Analytics
Analytics is another reason to consider offering backorders. You can collect data on out-of-stock products, which you can use to refine your e-commerce store and its operations.
You can track the number of backorders to gauge product demand. If an out-of-stock product has a lot of backorders, you may want to prioritize it in your marketing campaigns. A high number of backorders translates into strong demand.
It’s difficult to gauge demand for out-of-stock products without backorders. You can use a wishlist or restock reminder feature, but they aren’t as accurate as backorders. Shoppers may add an out-of-stock product to a wishlist, or they may opt to receive a reminder when the product is back in stock, regardless of whether they intend to purchase it.
Increases Shopper Loyalty
Shoppers may become more loyal to your e-commerce store if they can backorder products. They won’t have to return to purchase out-of-stock products. If you offer backorders, shoppers can purchase them in advance — before your e-commerce store has restocked them.
If you don’t offer backorders, shoppers may choose a competitor from which to purchase their products. Upon discovering that there’s no backorder option, they may visit a competitor’s online retail store. If the competitor has the product in stock or offers backorders, shoppers may purchase it.
Saves Inventory Storage Space
You can save inventory storage space by offering backorders. Products take up storage space. The more products your e-commerce store has in stock, the more storage space you’ll need.
Backorders, however, will reduce the amount of storage space your e-commerce store needs. Backorders are essentially orders for out-of-stock products that your e-commerce store is expecting to restock. You don’t currently have the products in stock, so they don’t take up storage space.
Disadvantages of Offering Backorders
While it can eliminate supply chain disruptions, improve cash flow, and more, offering backorders has some disadvantages. You will encounter more cancellations and refunds, for instance. Shoppers typically expect longer delivery times for backorders than regular orders, but they won’t wait indefinitely. Rather than waiting to receive an out-of-stock product, some shoppers may cancel their backorders. And you’ll have to issue refunds for these cancellations.
Not all e-commerce platforms support backorders. Many of them support preorders, but they may not support backorders. You should check your store’s platform beforehand to determine whether it supports this alternative order type.
You’ll have to track and process all your e-commerce store’s backorders. Processing backorders isn’t always easy. When you restock a product, you’ll need to review all backorders for that product. Some shoppers may have canceled their backorders, so you won’t have to ship them the product. But you’ll still have to ship the product to all other shoppers.
Products may take a while to restock. If a supplier is unable to deliver a shipment of product units within a reasonable length of time, you’ll need to provide an update to all shoppers who’ve back-ordered the product. Sending these backorder update emails can be tedious.
You should try to keep all products in stock. But if you run out of a product, you may want to offer backorders. It will allow shoppers to purchase the product before it’s been restocked. Offering backorders has disadvantages, but most e-commerce store owners will agree that it’s worth the effort.
