What Are Backorders? Causes, Costs, and How to Manage Them

A backorder is a customer order placed for an item that is currently out of stock. The order is held until the inventory is replenished, then shipped. Backorders are a normal part of running an ecommerce business, but each one carries a cost in customer wait time, refund risk, and lost margin from rush replenishment. The fix lives upstream of the order itself: tighter inventory accuracy, smarter safety stock, and a 3PL with real-time visibility.

What is a backorder?

A backorder is a customer order placed for an item that is currently out of stock. The order is held in your system until the inventory is replenished, then shipped. Backorders are a normal part of running an ecommerce business, but each one carries a cost in customer wait time, refund risk, and lost margin from rush replenishment.

A retailer can choose how to handle the out-of-stock state. The product page might show "available for backorder" with a longer ship date. It might show "out of stock" and remove the buy button. Or it might let the customer place the order and ship it as soon as inventory arrives. The choice depends on the product, the typical replenishment time, and the customer expectations in the category.

What is the difference between a backorder and a stockout?

A stockout is the inventory state. A backorder is a customer commitment placed during that state.

When you run out of stock and stop accepting orders, you have a stockout but no backorders. You lose the sale. When you run out of stock but keep accepting orders with a longer ship date, you have a stockout and you start collecting backorders. The customer keeps the order, but they expect the item to ship eventually.

The financial difference is real. A stockout means lost revenue. A backorder means delayed revenue, but also higher carrying cost: customer service time, payment processing, refund risk if the customer cancels, and the cost of expedited replenishment to keep the wait time short.

What are the most common causes of backorders?

Backorders almost always trace back to one of seven causes:

Demand spikes that outrun the forecast (a product gets featured by an influencer, a seasonal trend turns on early, a competitor goes out of stock and traffic shifts)

Supplier delays (the manufacturer falls behind, a port disrupts the container, a raw material shortage hits the supply chain)

Slow internal transfers between warehouse locations (the West Coast warehouse has stock but the East Coast warehouse does not, and the inter-warehouse transfer is taking days)

Inaccurate inventory counts (the system says you have 47 units in the warehouse, but a recent receiving error or pick error means you actually have 12)

Receiving delays (a container arrives but receiving has not put it away yet, so it is not sellable in the system)

Promotional flash demand (a sale or coupon drives volume the forecast did not account for)

Returns and exchanges holding stock in limbo (returned items waiting to be inspected and put back into sellable inventory)

Of these, inventory accuracy and slow internal transfers are the two that a 3PL can directly fix. The others require demand planning and supplier management on the brand side.

What does a backorder cost the business?

The cost of a backorder is rarely just the lost sale. It compounds:

Customer service load: each backorder generates an estimated 1 to 3 customer support contacts asking for status, refund, or alternate options

Refund and chargeback risk: roughly 15 to 30 percent of customers cancel or chargeback after waiting more than two weeks

Repeat purchase decline: a customer who waits through a backorder is less likely to come back. Studies show repeat purchase rates drop 20 to 40 percent after a poor stockout experience

Rush replenishment cost: expedited freight from supplier, weekend receiving, and overnight shipping to recover the wait time

Marketing waste: paid traffic that lands on out-of-stock or backorder pages converts at a fraction of the in-stock rate, but the ad spend already happened

Real example: a Shopify brand running paid ads at a $35 cost per acquisition that goes on backorder for 14 days will typically see CPA jump 30 to 50 percent over the next 30 days as paid traffic continues but conversion rate drops. The total cost of one major SKU going on backorder for two weeks can reach $20,000 to $50,000 for a mid-market brand once the lost sales, support load, and ad-waste are added together.

How do you manage a backorder when it happens?

Once the inventory drops to zero, the priority shifts from prevention to damage control:

Update the product page immediately to show "available for backorder" with an honest ship date estimate. Do not leave it as in-stock if you cannot ship within the standard window

Send a proactive email to anyone who has already ordered, with the new ship estimate and a one-click cancel option. Customers who get to choose are far less likely to chargeback than customers who feel stuck

Communicate the replenishment date in the order confirmation, the customer account page, and the support knowledge base. Make it easy to find

Offer a partial shipment for multi-item orders so the in-stock items ship now and the backorder ships later. Two shipments cost more, but they preserve the customer experience

Track backorder cancellation rate as a metric. If more than 20 percent of backorders cancel, the wait time is too long and the better answer next time is to remove the buy button

How can you prevent backorders before they start?

Prevention is mostly an inventory accuracy and safety stock problem.

Set safety stock by SKU velocity. Fast-moving SKUs need higher safety stock than slow movers. A common starting point is to hold 1.5x the average lead time demand for top sellers, then tune from there.

Forecast at the SKU level, not the category level. Aggregating demand by category hides the spikes on individual SKUs. A 5 percent increase in category demand can mean a 30 percent increase on the bestseller and zero change on the rest.

Tighten inventory accuracy with cycle counts. Cycle counts that audit a portion of SKUs each week catch errors before they cause stockouts. A warehouse with 99 percent inventory accuracy has roughly 10 times fewer surprise stockouts than one with 95 percent accuracy.

Move to real-time inventory visibility. Daily or weekly inventory pulls leave a window where the system thinks you have more stock than you actually do. Real-time visibility through a 3PL portal closes that window.

Pick a 3PL with multiple warehouses. If both coasts have stock, a regional spike in demand only depletes one location and the other can pick up the slack through a transfer. Single-warehouse setups have no buffer.

For a deeper look at how to set safety stock, see our guide on inventory days on hand.

What 2026 supply chain trends are making backorders more common?

Several factors in 2026 are pushing backorder rates up across ecommerce:

Semiconductor and DRAM memory shortages: lead times for new orders now exceed 58 weeks, and quarterly price hikes of 20 to 70 percent are coming through 2026. Any product with a chip in it is at risk

Tariff-driven inventory front-loading: brands are pulling inventory forward to beat tariff deadlines, which is straining warehouse capacity and creating uneven stock distribution

Trucking capacity contraction: shrinking carrier capacity is driving double-digit rate hikes in 2026 and slowing down inter-warehouse transfers

Beef and food-category supply constraints: protein-based ecommerce categories are dealing with raw material shortages

Returns volume spike: rising return rates are tying up sellable inventory in returns processing

The brands that are weathering 2026 well are the ones with multiple warehouses, real-time inventory visibility, and direct-to-supplier replenishment paths that do not depend on a single port or single carrier.

Should I accept backorders on my product page?

It depends on the product and the category.

Yes, accept backorders when: the replenishment is reliable and within 2 to 4 weeks, the customer is buying for a planned use rather than urgent need, you have proactive communication in place, and the cancel rate stays under 15 percent.

No, switch to "out of stock" when: replenishment is uncertain or longer than 4 weeks, the category expects fast delivery (everyday consumables, fast fashion, gifts for a near-term event), the cancel rate is climbing past 25 percent, or the customer service load is hurting your ratings.

The middle path is to capture email signups on the out-of-stock page rather than accepting the order. You preserve the demand signal and notify the customer when stock is back, without committing to a ship date you cannot meet.

How does 3PL Center help reduce backorders?

The two backorder causes that a 3PL directly affects are inventory accuracy and slow internal transfers. We address both:

Two warehouses near the major ports in California and New Jersey put 95 percent of the U.S. population within 2-day ground reach. When demand spikes regionally, the other coast covers

Same-day shipping on orders received by 2 p.m. local time means the inventory you have moves out the door fast, freeing the system to receive replenishment without backlog

Real-time inventory visibility through our client portal shows you exact unit counts as they change, not yesterday closing balance

24 to 48 hour receiving turnaround on inbound containers means new stock becomes sellable inventory faster, shrinking the window where you might run out

For a closer look at the receiving side of inventory, see our guide on warehouse receiving best practices. To run your monthly volumes through our pricing, use the fulfillment cost calculator. To talk through a specific backorder problem, get a quote and we will walk through where the inventory bottleneck is on your current setup.