What is a backorder?
A backorder happens when you sell through your stock of an item but still take the customer’s order and promise to ship it once new inventory arrives. The customer pays or reserves the item now and waits for delivery, rather than walking away empty-handed.
Businesses accept backorders to capture revenue they would otherwise lose to a competitor when demand outpaces supply. That sets a backorder apart from a true stockout, where the item cannot be bought at all and the shopper gets pushed toward another seller.
Inventory shortages are expensive at scale. According to IHL Group’s 2026 Inventory Distortion Study, out-of-stocks and overstocks cost retailers roughly $1.7 trillion a year, about 6.2% of global retail sales. Out-of-stocks make up the larger share, and the figure is an analyst estimate for large enterprise retailers.
Key characteristics
- Orders outrun stock: Backorders build up when orders arrive faster than inventory can cover them, driven by a demand spike, a supplier delay, or a forecasting miss.
- A commitment to deliver: The seller gives the customer an expected ship date, so the order is reserved instead of lost.
- A visible demand signal: A stack of unfilled orders, called a backlog, signals that customers want more than you can currently stock. U.S. durable-goods makers alone held about $1.6 trillion in unfilled orders as of July 2026.
- Measured with a fill rate: Tracking how many order lines you ship on time shows whether backorders stay under control or creep upward.
- Reduced, not eliminated: Setting reorder points and holding safety stock keeps backorders in check without erasing them. Extract Production saw 22% fewer stockouts with Fishbowl.
Example
Consider Koken USA, a Columbus-based tools distributor that grew fast enough to strain its supply chain, with long ocean-freight lead times pushing popular parts into backorder. By dialing in reorder points and demand forecasting with Fishbowl, Koken USA reduced sales backorders by 10%, which kept its best sellers moving and shipping on schedule through its order management system.
Related terms
- safety stock: extra inventory kept as a buffer so a demand swing or supplier delay does not force a backorder.
- stock replenishment: the process of reordering and restocking, which decides how quickly a backorder clears.
- reorder points: the stock level that triggers a new order so you restock before you run short.
- inventory management terms: a plain-language glossary of the concepts that surround backorders.
FAQ
Is a backorder the same as being out of stock? No. A backordered item can still be purchased and carries an expected restock date, while an out-of-stock item cannot be ordered and may never return.
How long does a backorder take? It depends on supplier lead times and production schedules, often a week to a couple of months. In the U.S., the FTC’s 30-day rule says sellers must ship on time, get the buyer’s consent to a delay, or issue a refund.
How do you reduce backorders? Sharpen demand forecasting, keep safety stock on your best sellers, set accurate reorder points, and use inventory software that shows stock levels in real time.
Fishbowl gives operators real-time visibility across purchasing and sales, so shortfalls surface early and backorders stay managed instead of chaotic. Book a demo to see how it works.