What Is a Backorder? Meaning, Causes and How to Manage One

A backorder is an order for an out-of-stock item that the seller accepts and agrees to ship once new stock arrives. The order stays open instead of being turned away.

For a seller, that protects a sale you would otherwise lose. It also creates a promise you now have to keep: a date to meet, a customer to update, and a purchase order to chase.

This guide explains what backorder means for sellers and shoppers, how it differs from out of stock, sold out, pre-order, and backlog, what causes it, and how to manage and measure it.

At a glance

• A backorder is a confirmed order waiting on stock that is expected to arrive.

• It is not the same as out of stock, sold out, a pre-order, or a backlog.

• Most backorders start as a planning gap: late reordering, thin safety stock, or supplier lead times that slip.

• Track backorder rate alongside fill rate to see whether the problem is growing.

What does backorder mean?  

Backorder means a confirmed order that cannot ship yet because the item is out of stock, while more stock is expected. The seller keeps the order open and ships it when the stock arrives. You will also see it written as "back order" or "back-ordered." All three mean the same thing.

The noun and the verb mean different things. A backorder is the order itself, recorded against a specific sales order. Backordering is the workflow that runs those orders, from telling the customer to shipping the item once it arrives. In a system, each backorder carries its own customer, quantity, linked purchase order, and expected date.

What does "backordered" mean on your order?  

The seller has accepted your order but does not have the item on hand right now. They expect new stock and will ship your order when it arrives. Most sellers let you cancel while you wait, and many charge only when the item ships. Check the seller's own policy to be sure.

If your order shows as backordered, four things are worth checking:

• The estimated ship date. It is based on the supplier's date, so it can move.

• Whether you have been charged. The order confirmation should say whether payment was taken at checkout or will be taken when the item ships.

• Whether the rest of your order ships now. Many sellers send in-stock items first.

• How to cancel. Look for a cancel option on your order page or in the backorder email.

Backordered does not mean the seller has lost your order or stopped selling the item.

What causes backorders?  

Backorders happen when demand outruns the stock you can ship. Common causes are an unforecasted demand spike, supplier delays, reorder points set too low, minimum order quantities, weak forecasts on slow movers, and selling the same units on several channels. Some businesses also backorder on purpose.

A backorder is usually a symptom of something that happened upstream. These seven causes are the most common.

• A demand spike you did not forecast: A seasonal peak, a promotion that performed better than planned, or a product that suddenly gets attention.

• Supplier lead time slipping: The purchase order went out on schedule, and the goods did not arrive on schedule. Lead time variability causes more backorders than lead time length does.

• A reorder point set too low: Stock reaches zero before the replenishment order lands. See what is a reorder point.

• Minimum order quantities (MOQs): You cannot place a small top-up order, so you wait until a full order is justified and run thin in the meantime.

• Forecasting error on slow movers: Low-volume stock keeping units (SKUs) are the hardest to predict and the easiest to understock.

• Selling the same stock on several channels: If your website, a marketplace, and a physical store all draw on one pool of stock but update it at different times, each channel can sell units another channel has already sold. The order is accepted, the stock is not there, and it becomes a backorder.

• A deliberate strategy: Build-to-order and just-in-time operations carry backorders as standard practice rather than as a failure.

The first six are problems to fix. The last one is a choice, and it changes how you should measure the others.

Backorder vs. out of stock vs. sold out vs. pre-order  

In brief: A backorder is an out-of-stock item you can still buy because restocking is expected. Out of stock means you cannot buy it right now. "Sold out" usually means the seller does not plan to restock. A pre-order is for an item that has not been released yet.

Backorder vs. pre-order  

A backorder is for a product that already exists and has run out. A pre-order is for one that has not been released yet. With a pre-order, you usually have a release date to give the customer. With a backorder, the date depends on your supplier, which makes backorder communication harder to get right.

Backorder vs. out of stock  

Every backorder starts as a stockout. Only some stockouts become backorders, because the rest are customers who found the item unavailable and left. That is the commercial case for backordering: it turns some stockouts into retained revenue instead of lost sales.

Does "backorder" mean "sold out"?  

Not quite. A sold-out item cannot be ordered and usually will not come back. A backordered item can still be ordered because new stock is expected. Some stores use the terms loosely, so check the product page: if it lets you order and shows a ship date, it is a backorder.

Backorder vs. backlog  

A backlog is every order a business has accepted but not yet completed, for any reason. A backorder is one kind of backlog item: an order held up because the stock is not there. All backorders sit in the backlog, but most backlog orders are not backorders.

Illustrative example: A distributor has 500 open orders. 470 are waiting to be approved, picked, or packed. 30 are waiting for stock. Its backlog is 500 orders. Its backorders are 30.

A growing backlog with steady backorders points to a fulfillment capacity problem. Growing backorders point to a stock problem.

How does backordering work?  

It runs in five steps. An order comes in for an item you do not have. You tell the customer. You raise a purchase order linked to that sales order. You receive the stock against the purchase order. Then you ship the waiting order, in full or in parts.

1. The order comes in. A customer orders an item you have run out of or more units than you hold.

2. Tell the customer. Confirm the order, flag the backordered item, and give an expected ship date.

3. Raise a purchase order linked to the sales order. This ties the incoming stock to the customer who is waiting for it.

4. Receive the stock against the purchase order. Check the quantity received and update your stock count.

5. Ship the waiting order. Send it in full, or as a second shipment if the in-stock items went earlier.

With a handful of backorders, a spreadsheet and a few emails can hold this together. As volume grows, the risk is losing track of which incoming stock belongs to which waiting customer. The link between the sales order and the purchase order is what stops backorders from slipping.

Partial and rolling backorders  

A partial backorder is when part of an order can ship and part cannot. Illustrative example: a customer orders 10 units, and you have 6. You can ship 6 now and backorder 4, or hold the whole order until all 10 are ready. Shipping in parts keeps the customer moving but adds a second shipping cost.

A rolling backorder is a backordered quantity that carries over from one replenishment cycle to the next until it is filled. If an item keeps rolling, supply is not keeping pace with demand for it.

When should you charge the customer?  

You have three options:

1. Charge at checkout. Simplest to run, but you hold money for an item you do not have yet, and you must refund if the customer cancels.

2. Authorize at checkout, capture at shipping. The amount is held on the card but not taken. Authorizations expire after a period set by the card network and payment provider, so long backorders may need a fresh authorization.

3. Charge when it ships. Easiest for the customer, with fewer refunds to process, but the payment can fail when you try to take it.

Whichever you choose, say so on the product page and in the backorder email.

Backorder examples  

1. Illustrative example:Online retailer. A popular phone case sells through two days after a phone launch. The retailer keeps the product page live with a "ships in 2 to 3 weeks" window, raises a purchase order with its supplier, and ships each waiting order as the stock lands.

2. Illustrative example: wholesale distributor. A hardware store orders 200 hinges, and the distributor holds 120. It ships 120 now and backorders 80, which go out with the next supplier delivery. This is a partial backorder.

3. Illustrative example: small manufacturer. A furniture maker accepts orders for a table while the timber is delayed. It quotes a longer lead time, charges when the table ships, and lets customers cancel without a fee. Here, backordering is the business model rather than a planning failure.

How long does a backorder take?  

There is no standard wait. A backorder takes as long as four stages added together: the time left on your purchase order, the supplier's actual lead time, your receiving and putaway time, and your normal pick, pack, and ship cycle. That can mean days for a local supplier or weeks for imported or made-to-order items.

Two practical points follow. Quote a range rather than a single date, because the supplier stage is the one you control least. And track each supplier's delivered lead time against their promised lead time, because the gap between the two is what turns a two-week backorder into a six-week one.

What do backorders cost a business?  

A backorder saves the sale, but it costs time and margin: customer service contacts, discounts offered to keep waiting customers, split shipments, cancellations during the wait, and a distorted demand forecast. A few backorders are manageable. A steady rate points to a stock planning problem.

The costs are spread across several places, which is why they often go unmeasured.

• Cancellations: The longer the wait, the higher the proportion of backorders that never convert.

• Support load: Backordered customers contact you for updates. Every day of delay adds contacts.

• Goodwill discounting: Discounts, free shipping and credits offered to keep a waiting customer erode the margin on the order.

• Split shipments: A multi-line order that is part backordered often ships twice, so you pay to ship the same order more than once.

• Distorted forecasts: Backordered demand can be recorded on the fulfillment date rather than the order date, which pushes demand into the wrong period and makes the next forecast worse. Record it on the date the order was placed.

When should you accept backorders?  

Accept them when the restock date is reliable, the wait is short enough for customers to tolerate, and the item is hard to buy elsewhere. Avoid them when supply is uncertain, margins cannot absorb split shipping, or a marketplace penalizes late dispatch.

Used deliberately rather than as a fallback, backordering supports three things.

• Customization: Because a backorder passes the requirement to your supplier before production or picking, it accommodates configurable and made-to-order products that a fixed stock model cannot.

• Lower carrying cost: Holding less stock frees capital and reduces storage, insurance and handling costs. See what is carrying cost for how to quantify this.

• Less obsolescence: Goods spend less time in storage, so there is less exposure to damage, expiry and product cycles moving on. For seasonal products, backordering lets you meet peak demand without carrying units into the off-season.

Perishable goods are the usual exception. Short shelf life leaves little room for supplier delay, so a backorder that slips can arrive with too little life left to sell.

How can you reduce backorders?  

Base reorder points and safety stock on actual lead times, improve forecasts on your top sellers first, hold suppliers to their delivered lead times and keep one stock count across every sales channel. Most backorders start as a planning gap, so the fix is usually earlier reordering rather than faster shipping.

If backordering is a strategy, the goal is to control the wait. If it is a symptom, the goal is to reduce the frequency. Both start in the same place.

1. Recalculate your reorder points using actual lead times, not quoted ones: A reorder point built on an optimistic lead time will keep producing backorders no matter how well you forecast.

2. Set safety stock against demand and lead time variability: See what is safety stock for the calculation. Variability matters more than average demand does here.

3. Improve forecasting on your highest-value SKUs first: Backorders on a top seller cost far more than backorders spread across a long tail. See inventory forecasting for the methods.

4. Score your suppliers on delivered lead time: Track promised against actual by supplier and by SKU, then negotiate or re-source the worst performers.

5. Renegotiate MOQs on fast movers: A lower MOQ lets you top up more often and hold less.

6. Sync stock across sales channels: Update every channel from one stock count, so two channels cannot sell the same unit.

7. Offer substitutes at the point of sale: A customer shown an available alternative may not need to wait at all.

How do you tell a customer their order is backordered?  

Tell them as soon as you know, before they chase you. Name the delayed item, give an expected ship window, and say whether the rest of the order ships now, when they will be charged and how to cancel. Then update them on a date you set, even if nothing has changed.

Most backorder cancellations come from silence rather than from the delay itself. A backorder notification should cover five things:

• Which item and quantity are affected, and which lines are shipping now.

• An expected delivery window, given as a range with a clear latest date.

• Whether the customer has been charged now or will be charged on dispatch.

• Whether they can cancel, and how.

• When you contact them again. Then contact them on that date, even if nothing has changed.

The last point is the one most often skipped. A scheduled update with no news still tells the customer the order has not been forgotten.

Copy and adapt this email:

Subject: An update on your order [#1234]: one item is backordered

Hi [Name],

Thanks for your order. One item, [product name] ([quantity]), is backordered. We expect to ship it between [earliest date] and [latest date].

[The rest of your order shipped today.] OR [Your full order will ship together by [latest date].]

You will be charged for this item [today] OR [when it ships].

If you would rather not wait, you can cancel this item any time before it ships: [link].

We will email you again on [update date], even if nothing has changed.

[Your name]
[Store name]

A simple backorder policy  

A backorder policy sets expectations before the customer orders.

Copy and adapt this template:

Backorder policy

Which items can be backordered
Items marked "[Available on backorder]" on the product page can be ordered while they are out of stock.

Ship dates
We show an estimated ship window on the product page and in your order confirmation. We will update you every [interval], and sooner if the date changes.

Payment
[We charge your card when the backordered item ships.] OR [We charge your card at checkout.]

Split shipments
In-stock items ship straight away. [We pay for the second shipment.] OR [A second shipping charge of [amount] applies.]

Cancellations and refunds
You can cancel a backordered item any time before it ships, from your order page or by emailing [address]. Refunds are issued within [number] business days.

How do you measure backorder rate?  

Backorder rate is the share of orders that could not ship in full from stock when they were placed. It shows how often you are selling stock you do not have. To calculate it, divide backordered orders by total orders for the period and multiply by 100.

Backorder rate = (backordered orders ÷ total orders) × 100

Illustrative example: A business takes 4,000 orders in a month. 240 of them contain at least one backordered line. 240 ÷ 4,000 = 0.06, so the backorder rate is 6%.

Track it by SKU as well as overall. A 6% rate spread evenly across the catalog is a forecasting issue. The same 6% concentrated in four products is a supplier issue, and it needs a different fix. There is no universal benchmark for a good rate, because it depends on your category, your margin and whether backordering is deliberate. Compare it against your own trend instead.

Pair it with fill rate, which is the percentage of order lines you fulfill from stock on the first attempt. Backorder rate counts how often you fall short. Fill rate counts how much of the order you still managed to ship. The guide to order management covers where both fit in the wider fulfillment process.

Managing backorders in Zoho Inventory  

In Zoho Inventory, when an item on a sales order is out of stock, a backorder can be raised from that sales order, and it generates a purchase order for the missing quantity. That keeps the incoming stock tied to the customer who is waiting for it.

You can also prioritize a regular customer by putting other confirmed sales orders on hold and reallocating the stock to them. If it makes more sense for the supplier to ship straight to the customer, you can convert the sales order into a dropshipment.

See how backorders work in Zoho Inventory and how dropshipments are set up.