How to Minimise Backorders and Keep Your Customers: 7 Expert Tips

Minimising backorders is essential for keeping customers satisfied and maintaining a strong and reliable business. A 2022 research reveals that backorder delays can cause a 6.1% reduction in orders the next year and over 25 million dollars per year in lost profit.

A backorder happens when a product is out of stock but still available for purchase, with delivery promised at a later date. While this can help businesses avoid lost sales, frequent backorders can frustrate customers, create uncertainty, and damage brand reputation. 

Backorders can also strain business operations. Constantly updating customers, processing refunds, or handling complaints takes time and resources that could be better spent on growth and innovation. 

To maintain a seamless shopping experience, businesses need a proactive approach to reducing stock shortages. This article explores seven expert strategies to minimise backorders and improve inventory management.

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1. Improve Demand Forecasting

Accurate demand forecasting is one of the most effective ways to minimise backorders. By analysing historical sales data and market trends, businesses can predict which products will be in high demand and when. 

Seasonal patterns, industry shifts, and economic factors all impact purchasing behaviour. To avoid stock shortages, businesses should take a data-driven approach to inventory planning.

A good starting point is to collect 6–12 months of sales data to identify demand patterns. Businesses can then set up a forecasting model using statistical methods or AI-powered tools to predict future demand. Modern technology, such as machine learning algorithms, can analyse large data sets to detect trends and improve forecasting accuracy.

Additionally, businesses should factor in supplier lead times and track customer purchasing habits to adjust stock levels proactively. These tools continuously refine their predictions based on real-time data, allowing businesses to make informed stocking decisions. 

2. Strengthen Supplier Relationships

A 2020 paper revealed that, during the COVID-19 pandemic, companies that maintained close contact with their suppliers were better equipped to manage supply issues and maintain inventory levels, thereby minimising backorders. 

One effective approach is scheduling regular check-ins with suppliers to discuss inventory levels, upcoming demand changes and potential risks. Regular communication with suppliers allows for the early identification of issues that could lead to delays. This proactive approach enables businesses to adjust their inventory strategies accordingly and reduce the likelihood of backorders. 

Aside from this, sharing forecasting data such as sales trends and demand predictions can help suppliers plan production more effectively. Formal Service Level Agreements (SLAs) can also help businesses have clear expectations on delivery times, quality standards and penalties for delays. 

Diversifying the business’ supplier network can mitigate risks since it prevents over-reliance on a single source. Meanwhile, implementing real-time tracking lets businesses monitor shipments and address potential delays before they impact customers. 

3. Maintain Safety Stock

Keeping a safety stock is a simple but effective way to minimise backorders caused by supply chain delays or sudden demand spikes. Having extra inventory on hand means you can still fulfil customer orders even when unexpected disruptions occur.

To get safety stock levels right, start by analysing past sales data and identifying seasonal trends. If certain products sell out quickly at specific times, increase buffer stock accordingly. 

A simple way to calculate safety stock is by considering how much demand varies and how long it takes to restock. One common formula is: Safety Stock = Demand Variability × Lead Time Buffer.

This means you take the usual ups and downs in customer demand and multiply it by a safety factor based on how long it takes to get new stock. This approach can help businesses in having just enough extra inventory to handle unexpected demand without overstocking.

For example, Kellogg’s uses the Kellogg Planning System (KPS) to manage inventory across multiple facilities, ensuring they always have enough supply to meet demand without excessive overstock.

Another strategy is to categorise products based on demand volatility. High-demand or unpredictable items should have more safety stock, while stable products may require less. 

4. Optimise Inventory Management Systems

A reliable inventory system helps prevent stockouts. Thus, optimising your inventory system is a good way to minimise backorders. Systems like Couriers and Freight's Warehouse Management System (WMS) offer features designed to reduce backorders. 

This system keeps stock levels accurate with real-time inventory tracking to prevent stockouts and overstocking. It also speeds up fulfilment, improves accuracy, and reduces delays as its automated processes cut down manual errors for efficiency. 

Using real-time tracking software syncs across sales channels can reduce overselling and misallocation. Aside from this, cloud-based platforms provide businesses with accurate stock visibility, allowing quick responses to demand shifts.

Performing regular audits can also keep stock levels accurate. Cycle counting, or checking small portions of inventory frequently, helps businesses catch discrepancies early without interrupting operations. 

5. Streamline Your Supply Chain

An efficient supply chain reduces backorders by preventing delays in procurement, warehousing and distribution. Identify bottlenecks in your supply chain by analysing past setbacks and adjusting order frequencies or supplier arrangements accordingly.

Reliable shipping and fulfilment partners are also essential for a successful business. Choose logistics providers with fast and consistent delivery. Consider 3PLs for quicker order processing. 

Another tip is to diversify your supplier network to avoid delays. Relying on one supplier increases risk, so build relationships with multiple sources, including local suppliers for faster restocking. Strengthening your supply chain keeps stock flowing and customers happy.

6. Offer Alternative Products or Pre-Order Options

When an item is out of stock, giving customers alternative choices can help maintain sales and keep them satisfied. 

Instead of losing a potential sale, suggest similar products that meet the same need. Display these alternatives clearly on your website and train customer service teams to guide shoppers towards suitable options. A 2015 study has shown that this approach can retain up to 32% of sales that might otherwise be lost due to product unavailability.

Pre-ordering is another effective way to manage backorders while keeping customers engaged. If a product is temporarily unavailable, allow customers to purchase it in advance with a clear estimated delivery date. 

Be upfront about wait times and provide regular updates on expected delivery.. Offering incentives, such as a small discount or free shipping for pre-orders, can also encourage customers to wait rather than shop elsewhere.

7. Communicate Transparently with Customers

Clear and honest communication is crucial to maintaining customer trust.

If an item is unavailable, inform the customers as soon as possible. Display stock availability in real-time on your website and update product pages to prevent customers from placing orders for out-of-stock items. 

If a delay occurs, send emails or SMS notifications with estimated delivery times and any changes to their order status. Avoid vague timelines, as "expected to ship in 7–10 days" is far more helpful than "coming soon." Customers appreciate honesty and will be more likely to wait for their order if they feel informed.

Offering some form of compensation can help maintain goodwill. Consider discounts on future purchases, free shipping, or loyalty points to show appreciation for their patience. This not only keeps customers satisfied but also encourages repeat business.

Minimise Backorders and Keep Your Customers

Backorders can frustrate customers and push them toward competitors, leading to lost sales and potential damage to a brand's reputation. To maintain trust and loyalty, businesses must take proactive steps to reduce stock shortages and ensure that products remain available when customers need them.

Businesses can significantly decrease the risk of backorders by implementing strategies such as demand forecasting, supplier diversification, efficient supply chain management and clear customer communication.

By using these tips, businesses can minimise backorders, enhance customer satisfaction, and create a seamless shopping experience that fosters long-term loyalty. A steady product supply builds customer trust and gives your business a competitive edge.

Slash Backorders & Keep Your Customers Happy

Prevent stockouts, build loyalty, and keep your inventory flowing with Couriers & Freight’s advanced logistics platform.

Get a Quote Now