Disadvantages of Backorders in eCommerce And How to Manage Them

On Amazon, every sale is a win in a fierce marketplace. Products ready to ship immediately have the upper hand. But backorders? They can make you miss out on sales, both now and in the future.

How can sellers on Amazon tackle the hurdles backorders bring? This piece sheds some light and offers hands-on tactics for Amazon sellers to conquer the complexities of backorders.

Disadvantage #1: Customer Dissatisfaction Due to Delayed Deliveries

On Amazon, customers expect fast deliveries, especially with Amazon Prime's speedy promises. But when you face backorders, this promise can falter and lead to unhappy customers.

Customers used to Prime's timely deliveries feel disappointed with delays. This disappointment can turn into negative feedback, visible to everyone on Amazon. Such feedback not only pushes away potential buyers but can also hurt your overall rating. A lower rating affects your product's visibility, search rankings, and ultimately, sales.

Amazon's A-to-Z Guarantee adds another layer of complexity — it ensures customers get their orders on time. If they don't, due to backorders or other reasons, they can get a refund. This means a direct financial hit for you and further negative sentiment towards your brand.

Here’s how you can tackle this issue:

• Set realistic delivery dates: Use Amazon's "Delivery Date Promise" feature to give accurate delivery estimates for backordered items. This clarity helps customers decide and can reduce dissatisfaction.
• Monitor your shipments: Keep an eye on your FBA inbound shipment times. Past data can show average shipment times, letting you tweak your delivery promises. If FBA can't deliver on time due to backorders, think about using FBM as a backup. It might need more logistics and management from your side, but it can help keep your delivery promises.
• Review lead times: Regularly check and adjust your lead times based on how reliable your suppliers and shippers are. Regular checks can spot issues and make your supply chain smoother, making backorders less frequent.

Challenges like backorders test businesses' adaptability. But with clear communication, proactive steps, and a focus on customer satisfaction, you can overcome this challenge.

Disadvantage #2: Increased Operational Costs from Handling Backorders

Amazon is a beacon of efficiency, but backorders can disrupt this, escalating your operational costs. These aren't just about potential lost sales; they ripple through your entire operation.

Using Amazon FBA? Backorders can mean steeper storage fees, especially during peak times like Black Friday. Amazon's pricing encourages swift inventory turnover. Backordered items, taking up space, can lead to heftier fees if they linger unsold.

Shipping costs can also spiral. To appease customers, you might send available items first and backordered ones later. While this boosts customer satisfaction, multiple shipments invariably cost more than a single consolidated one. Plus, the urgency to replenish backordered stock can tempt you into pricier shipping options or even higher supplier costs, denting your profits.

Here are four practical approaches to handle this issue:

• Clear communication with customers: Being upfront about backorder delays can be a cost-saving strategy. Utilize Amazon's messaging system to keep customers informed. Offer them choices: wait for the item, choose an alternative, or cancel their order. This proactive approach can reduce split shipments, thereby conserving shipping costs.
• Tailored email templates: Craft customized email templates that directly address backorder concerns. Suggest alternative products and guide customers towards available items, minimizing the operational hiccups linked with backorders.
• Strengthen supplier relationships: A collaborative approach ensures suppliers understand and align with your goals. This can lead to better terms, pricing, and faster restocking during backorder situations, helping you manage costs and maintain service quality.
• Diversify shipping options: While expedited shipping can address immediate backorder issues, it's essential to have a mix of shipping options. This flexibility can help balance costs and delivery times, ensuring you meet customer expectations without incurring unnecessary expenses.

While backorders present operational and financial challenges, a well-thought-out strategy centered on customer communication, supplier collaboration, and efficient inventory management can help you ensure profitability and customer satisfaction.

Disadvantage #3: Inventory Management Challenges

Source: BigCommerce

The prized Buy Box on Amazon, which boosts sales, considers stock availability. If you're often hit with backorders, you might lose this advantage to rivals who keep their shelves full. This loss isn't just about immediate sales; it can dim your product's visibility and ranking over time.

Related reading: Get More Amazon Sales with a Buy Box Tracker

Amazon's IPI (Inventory Performance Index) measures your inventory's health. Too many backorders? Your IPI score might drop, limiting your storage space during busy times. This can push you into hard choices about what to stock and how much.

Predicting demand gets tricky too. Backorders can distort sales data, making it hard for you to foresee future demand. This confusion can trap you in a cycle of overstocking (and paying more storage fees) or understocking (and facing more backorders).

You can avoid this by:

• Mastering inventory with Amazon tools: Amazon's inventory prediction tools are designed to give you an edge. Harnessing the power of Amazon's extensive data, these tools offer invaluable insights into potential demand shifts. Understanding and anticipating these shifts can help you adjust your stock levels more effectively and ensure you're always in sync with customer demand, minimizing the risk of backorders.
• Exploring third-party software: While Amazon provides robust tools, there's a world of third-party inventory software out there that integrates seamlessly with the platform. These specialized tools delve deeper and offer you granular insights that can be pivotal for inventory management. When you leverage these insights, you can fine-tune your stock levels with precision and reduce unnecessary costs.

RestockPro by eComEngine can help you manage your FBA inventory more effectively.

In Amazon's ever-shifting landscape, stay nimble, use data to guide you, and build trusty supplier relationships to keep your inventory game strong and in sync with market trends.

Disadvantage #4: Lost Sales Opportunities

If your product is on backorder, customers might not stick around. With so many options on Amazon, they can easily jump to a similar product that's in stock. This not only means you lose a sale, but your competitors get a boost, potentially climbing higher in rankings.

Plus, a track record of backorders can drag down your Amazon rating. Drop too low, and you'll slide down in search results, making it harder for customers to find you. And watch out: competitors might run ads against your out-of-stock product, snatching away potential sales.

When backorders happen, have a plan to keep your customers close:

• Offer promo codes: Give exclusive discounts to those hit by backorders. It's a "sorry" and a "please come back" rolled into one, encouraging future buys.
• Bundle up: When backordered items return, think about pairing them with related products at a special price. It clears your shelves and gives customers a deal they'll love.
• Upgrade their shipping: If someone's waited for a backordered item, consider speeding up their shipping for free. It's a small gesture that can smooth over any frustration.
• Engage after purchase: Check in with your customers. Ask for feedback, address any issues, and throw in exclusive offers. Make sure they know you value them, backorders and all.

With a can-do attitude and a focus on keeping your customers happy, you can turn hurdles like backorders into chances for better customer relationships and loyalty.

Bouncing Back(order): Ensure Customer Loyalty Amid Delays

Backorders, though a usual hiccup in eCommerce, can hit especially hard on a competitive stage like Amazon. Handling backorders isn't just about salvaging sales; it's about safeguarding a brand's long-term standing and trust in a constantly shifting market.

However, armed with the right approaches and tools, you can flip these obstacles into chances for growth, ensuring steady customer contentment and earnings.

How can you remain a step ahead and deliver flawless customer journeys, even when supply chains hit a snag? The answer is key to ensuring customer loyalty.