Shopify backorders explained: How to manage backorders and keep customers happy

What if a key supplier goes out of business? Or another huge container ship gets lodged in the Suez Canal? What if you simply underestimate demand for your latest product?

Even the best preparation can’t completely eradicate the risk of stock shortages. But  merchants leverage Shopify backorder management to keep selling out-of-stock products – thereby improving inventory efficiency, sustaining sales, and keeping customers happy.

What is a Shopify backorder?

A Shopify backorder is when a customer buys a product that isn’t currently in stock, meaning their order will be fulfilled at a later date. Essentially, by allowing shoppers to place backorders, you’re promising to complete delivery as soon as the product is available again.

Shopify backorders vs out-of-stock vs preorders

There are plenty of similarities between Shopify backorders, out-of-stock products, and preorders. But they’re not exactly the same:

• Backorders are when a customer buys an existing product that isn’t currently available due to stock-related issues.
• Out-of-stock products are existing products that aren’t in stock, and may never be again.
• Preorders are a way to sell new, as-yet-unreleased products ahead of the drop date.

So there’s some crossover – both backorders and preorders apply to products that are currently out of stock – but they apply in different contexts.

Why do backorders happen?

Let’s take a look at the most common causes for backorders on Shopify:

Supply chain delays 

Even small Shopify stores rely on multiple suppliers, while larger retailers might work with dozens or hundreds. And if just one of those suppliers experiences some sort of disruption, the knock-on effect can lead to lengthy stock shortages – which, in turn, affects a store’s ability to fulfil orders on time.

High/unpredictable demand

In an ideal world, you’d see consistent sales across your full product range, helping you maintain sufficient stock levels without packing your warehouse with unsold stock. But consumers are often anything but consistent, making it tough to predict how much inventory you’ll need across key lines. And while big spikes in demand lead to more revenue in the short term, they can also drive up stockouts.

Seasonal spikes

Demand is also affected by seasonality. This is generally pretty predictable – if I’m selling pre-carved jack-o'-lanterns, I’m going to want plenty of inventory in mid-to-late October and none thereafter – but you can still get caught out if you don’t plan accordingly.

Inventory management issues

Low stock levels aren’t always unforeseen. Some retailers keep them deliberately low to save space in warehouses. While this helps them keep costs down, it also places them at higher risk of stockouts, so they’re more likely to rely on backorders to meet customer demand.

Human error

Maybe you ordered 10 products from your supplier instead of 100, or perhaps your supplier sent them to the wrong address. Pobody’s nerfect. Unfortunately, basic human errors like these can lead to unanticipated stock shortages and fulfillment delays.

Benefits of enabling backorders on Shopify

Allowing customers to backorder your products helps you secure the sale right now rather than missing out due to low stock. But that’s not the only benefit of enabling backorders:

Build urgency and scarcity

Scarcity and urgency are key tools for driving sales – and they’re naturally baked into backorders. After all, if the product wasn’t in high demand and scarce supply, it wouldn’t be out of stock, so the customer wouldn’t need to backorder it in the first place.

Learn more: The Psychology of FOMO in eCommerce: Why Back-in-Stock Alerts Work 

Reduce storage costs

Offering backorders allows you to keep meeting customer demand, even when a product is out of stock. This means you don’t have to order extra “safety stock” to guard against stockouts, helping you keep storage costs down.

Test demand (with minimal risk)

Struggling to predict demand for a new product? No bother. Just allow customers to backorder it – so if your initial stock flies off the shelves faster than expected, you can still keep bringing in sales.

Boost loyalty and retention

Did you know that two-thirds of consumers would leave an ecommerce site and purchase from a different retailer if a product they were trying to purchase was out of stock? But if you offer stockouts, you can potentially retain them as a customer by letting them buy from you instead.

Potential drawbacks and risks

There are few black-and-white decisions when it comes to ecommerce strategy, and choosing whether to enable backorders is no different. Here are the biggest potential downsides:

• Greater strain on your support team from customers chasing up their order status.
• Lost sales caused by slow fulfillment, with “slow delivery” cited as the second-biggest cause of cart abandonments

• Possible loss of trust from customers facing extended waits for backordered products.
• Increased risk of negative reviews if communication around backorders isn’t handled effectively.
• Higher cancellation rate as customers lose patience while waiting for their backorder to arrive.

None of that stuff is good. But, to be clear, you should be able to overcome those issues with strong, proactive communication that keeps customers up to date on expected shipping times.

When should Shopify merchants use backorders?

Backorders aren’t a great fit for every store, so let’s take a look at some common scenarios for when you should (and shouldn’t) enable them:

It’s also worth noting that enabling backorders isn’t a binary decision. You can turn them on for a short-term spike in revenue, then disable them to mitigate some of the risks we highlighted in the previous section. Your store, your rules.

How to set up Shopify backorders?

Unless you’re confident coding your own solution from scratch, there are two ways to start offering backorders on Shopify:

• Use Shopify’s built-in functionality
• Use a third-party app

We’ll walk you through both approaches here…

With Shopify’s native tools

Setting up backorders in Shopify is super simple:

• Log in to your Shopify admin.
• In the left-hand menu, click Products and choose the product you want to make available for backorders.

• From the product screen, scroll down to the Inventory section and check the boxes marked Track quantity and Continue selling when out of stock.

Now you can sell items even when they’re unavailable. Easy, huh?

The only problem is that you also need to find a way to warn customers the product isn’t in stock right now, set expectations around fulfillment, and keep them posted on their order status. And if you’re relying solely on Shopify’s native tools, you’ll have to do it all manually – which is fundamentally unscalable.

With a preorder app

Don’t fancy handling all the leg work yourself? Use a dedicated app like STOQ to:

• Create preorder/backorder offers for products individually or in groups
• Automatically add a preorder/backorder button to relevant product pages

• Capture full or partial payments from customers placing backorders
• Build automated email and/or SMS sequences updating customers on their order

With STOQ, everything happens on autopilot – so you never have to worry about customers not knowing a product was out of stock, or forgetting to email someone about their order status.

Learn more: How to sell products on Shopify even when they’re out of stock

Start driving backorder revenue with STOQ

As we’ve seen, there are plenty of benefits to enabling backorders, from generating more sales to cutting storage costs and building urgency and scarcity.

But if you’re serious about turning backorders into a new revenue, you can’t do it all manually. You need a dedicated app to promote backorders and automatically communicate with customers throughout the fulfillment process – and STOQ has everything you need to go from “Sold out” to “Sold again”.

Start using STOQ for free!

FAQs

What are some common inventory alert mistakes?

Common inventory alert mistakes include relying solely on manual tracking for stores with high SKU counts, failing to use location-based or channel-specific thresholds, and not optimizing notification timing for both merchants and buyers.

What are some Shopify backorder management best practices?

Shopify backorder management best practices include calculating and maintaining appropriate safety stock to avoid stockouts, using demand forecasting and inventory management apps, and training staff on backorder management workflows. Also, consider using an app like STOQ to enable backorders and share automated order status updates with customers.