Backorder vs Out of Stock: What’s the Difference?

The main difference between backorder and out of stock is whether the seller accepts an order for later fulfillment. Out of stock means inventory is unavailable for immediate supply. A backorder means the seller has accepted an order while waiting for more inventory.

A product can therefore be out of stock and available to backorder at the same time. When a store displays “Out of Stock” and disables checkout, it is choosing not to accept new orders for that item. Retailers can configure their inventory systems to allow or block purchases when available stock reaches zero.

For shoppers, the distinction affects when they can order and receive a product. For businesses, it affects order commitments, customer communication, and replenishment planning.

What Does Backorder Mean?

A backorder is an accepted order that cannot be supplied immediately because there is not enough available inventory. The seller expects to obtain stock and fulfill the outstanding quantity later.

Backorders can affect an entire order or only part of it. For example, if a customer orders 50 units and 35 are available, the remaining 15 may be backordered. Whether the seller ships the available units first depends on its policy and the customer’s requirements.

Before placing a backorder, check the estimated shipping date, when payment will be collected, and cancellation options.

For more examples, read our guide to what backordered means.

How Long Does a Backorder Take?

There is no single backorder timeline that applies to every product or seller. The wait depends on when replenishment arrives, how much of that stock is available for your order, and how quickly the seller can process and ship it.

Separate these three dates:

• Restock date: when inventory is expected to arrive.
• Ship date: when the seller expects to dispatch your order.
• Delivery date: when the shipment is expected to reach you.

An incoming shipment may already be partly committed to earlier orders. Its arrival does not necessarily mean every backorder will ship immediately.

Illustrative example: If stock arrives in 10 business days, receiving and order preparation take two more, and transit takes three, delivery would be approximately 15 business days away. This assumes the shipment includes your allocation and there are no further delays. It is an example, not an industry average.

For a real purchase, use the estimate attached to your order. LEGO, for example, explains that its product-page backorder shipping estimates can change.

What Does Out of Stock Mean?

Out of stock means there is no inventory currently available to supply the item from the relevant store, warehouse, or sales channel.

Many retailers stop accepting orders at that point. Others offer backorders, alternatives, or a notification when inventory becomes available again.

Out of stock does not automatically mean:

• The product is discontinued.
• The seller has no replenishment scheduled.
• Every location or product variant is unavailable.

“Temporarily out of stock” generally indicates an expected return, but it does not establish a delivery date. Check the exact model, size, color, and selling location before deciding whether to wait.

Backorder vs Out of Stock: Key Differences

A real retail example: LEGO distinguishes between sets that can be ordered for later shipment and temporarily unavailable sets that cannot currently be ordered. It separately identifies retired products that will not be restocked. This shows why “out of stock” and “discontinued” should not be treated as interchangeable.

Backorder vs Pre-Order: What’s the Difference?

It’s also helpful to distinguish backorders from pre-orders, as these terms sometimes get mixed up. Both involve waiting for a A pre-order is an advance purchase before a planned release or availability date. A backorder usually concerns an existing product that cannot be supplied immediately because available inventory is insufficient.

For example, ordering a new appliance before its launch is typically a pre-order. Ordering the same model after it becomes unavailable may be a backorder.

Retailers do not always use these labels identically. Shopify also supports pre-orders for out-of-stock products, so read the seller’s availability, payment, and shipping terms rather than relying on the label alone.

Common Causes of Backorders and Stockouts

No company likes telling customers that products aren’t available. So why do backorders and out-of-stock situations happen? The root cause is usually an imbalance between supply and demand, but the specific reasons can vary. Here are some common causes:

• Sudden Demand Surges: An unexpected spike in customer demand can deplete inventory faster than anticipated. For instance, holiday shopping frenzies or an internet trend can send a product’s sales skyrocketing overnight. If supply can’t immediately catch up, backorders pile up or items go out of stock.
• Supply Chain Disruptions: Delays or problems in the supply chain are a major culprit. This includes supplier delays, manufacturing issues, or shipping problems. Events like factory shutdowns, raw material shortages, port delays, or global crises (e.g. natural disasters, pandemics) can slow down replenishment. Such supply chain delays mean even if consumer demand is normal, stock isn’t refilled in time.
• Long Lead Times: Products that require long production or shipping lead times are inherently at higher risk. If it takes your supplier 3 months to make and deliver an item, any forecast miss can leave you out of stock for a long period. Businesses with very extended supply lines often use backorders to bridge the gap, but customers might be waiting a while.
• Inaccurate Forecasting: Poor inventory forecasting or planning is a frequent cause of stockouts. If a company underestimates how much product to have on hand (or how quickly it sells), they run out. Conversely, overestimating might mean they avoid backorders but at the cost of holding excess stock. Striking the right balance is tricky. Many backorder problems are “symptoms of inaccurate forecasting” that could be mitigated with better demand planning.
• Insufficient Safety Stock: Related to forecasting, not keeping a buffer of extra inventory (safety stock) means any little spike in sales or a slight supplier delay will cause an immediate stockout. Companies that run very “lean” on inventory to save costs are more prone to backorders when things don’t go perfectly.
• Supplier or Manufacturer Issues: Sometimes the issue isn’t on the retailer’s end at all. A manufacturer might face production delays, quality control issues, or shipment errors. If your supplier fails to deliver on time, your shelf goes empty. Small retailers especially might get de-prioritized by bigger suppliers and end up waiting longer for restocks, causing backorders for their customers.
• Inventory Management Errors: Data and process errors in inventory management can also lead to phantom stockouts. For example, miscounting inventory, not updating stock levels in the system, or syncing issues in an omnichannel environment might show inventory available when it’s actually not (resulting in unexpected backorders), or vice versa. Good inventory management systems and audits are important to prevent these human or technical errors.
• Intentional Stock Strategy: In some cases, businesses intentionally keep inventory low and accept backorders as a strategy – for example, luxury or limited-edition products to maintain an aura of exclusivity, or small businesses that can’t afford large stock holdings. They’d rather sell out and take backorders than overstock. This can boost the perception of high demand, but it’s a fine line to walk without upsetting customers.
• External Crises and Seasonality: Weather events (like hurricanes prompting generator purchases), geopolitical issues, or seasonal trends (flu season for pharmaceuticals) can all create temporary mismatches in supply and demand. Many companies experience regular seasonal backorders for their high season products (e.g., air conditioners in summer) if they purposely produce less during off-season.

Understanding why backorders happen is the first step to preventing them or at least minimizing their impact. Next, we’ll look at how handling backorders vs. out-of-stock situations can actually impact your business positively or negatively.

Pros and Cons of Allowing Backorders (vs. Marking Out of Stock)

Accepting a backorder creates a commitment that the business must track and fulfill. The decision should reflect supply reliability, customer needs, and the cost of managing delayed orders.

Benefits of Accepting Backorders

• Capture willing buyers: customers who can wait have a way to place an order.
• Record demand: outstanding quantities show what customers have ordered beyond available inventory.
• Support replenishment planning: confirmed orders can help determine how incoming stock should be allocated.

These benefits depend on reliable follow-through. An accepted order can still be canceled.

Drawbacks and Challenges of Backorders

• Customer Frustration: The most obvious downside is that customers may get tired of waiting. Backorders require patience, and not everyone will be happy about a delay. If someone expected 2-day shipping and now hears the item will ship in 3 weeks, you risk cancellations and a hit to your brand loyalty. There’s always a chance the customer changes their mind, finds an alternative, or just cancels out of frustration.
• Uncertain Fulfillment: Backorders are a promise that you’ll deliver later – but what if your supplier falls through or takes longer than expected? Accepting backorders can put you in a tough spot if restock timelines slip. Retailers must be cautious not to take more backorders than they can reasonably fulfill in a timely manner. Failing to fulfill backorders (having to cancel them eventually) will definitely upset customers more than if you hadn’t taken the order at all.
• Operational Complexity: Handling backorders adds extra work operationally. Your systems need to track backordered items, your staff needs to manage those orders specially, and your customer service team must handle inquiries about them. It’s not a “set and forget” situation. There’s complexity in merging backorders with new stock when it arrives, potentially processing partial shipments, and keeping payment information up to date if the charging happens later. Small businesses might find this overhead challenging without good systems in place.
• Risk of Overselling: If not managed carefully, backordering can lead to selling more units than you actually receive (especially if there are supplier shortfalls). Overselling results in some backorders that can’t be filled, forcing cancellations and apologies. This is often due to poor inventory visibility or delays in updating the website. It’s a scenario you want to avoid at all costs – it’s bad for customer trust.
• Delayed Cash Flow (in some cases): If your policy is to charge customers only when you ship, backorders won’t bring immediate cash in. You have a bunch of unfulfilled orders (liabilities) on your books. This can be a cash flow strain if you need to pay for the new inventory upfront but don’t get paid by customers until later. (By contrast, if you charge at order time, you get the cash but incur an obligation to fulfill or refund.)
• Not Suited for All Products: Backorders make less sense for certain types of goods. If an item is a commodity that customers can find easily elsewhere, many won’t wait for you – they’ll just go buy from another store. For low-margin or low-uniqueness items, taking backorders might just prolong the inevitable loss of a sale. Also, for extremely time-sensitive needs (say, medical supplies or event-based items), a backorder offer won’t satisfy the customer’s need.

The Out-of-Stock Approach

By contrast, marking an item “Out of Stock” and not accepting orders can have its own pros/cons:

• Pros: It sets clear expectations – no false hope. Customers won’t order and then get annoyed by a delay because you simply don’t take the order. This can preserve trust through honesty. It also can create an urgency to buy when it’s available (if used sparingly, a product that’s often sold out might seem highly popular, which can spur future demand). Operationally, it’s simpler – you don’t have to track outstanding orders. For example, some brands intentionally use “out of stock” as a strategy to avoid overselling and to encourage customers to come back when available, hopefully eagerly.
• Cons: Every out-of-stock item is a sale you could have had but didn’t. If the customer finds it somewhere else in the meantime, you’ve lost not just that sale but possibly future business from that customer. Frequent stockouts can damage your reputation and customer loyalty – shoppers might think you’re unreliable or poorly managed. There’s also the lost opportunity to capture demand data; with no orders, you might underestimate true demand for the product.

In practice, many businesses strike a balance: they might allow backorders for certain high-value or unique products that customers are willing to wait for, but mark as out-of-stock for inexpensive, easily substitutable products to avoid hassle. It comes down to customer expectations and the nature of the product. Inventory management strategy should be tailored to your business model to decide when backorders make sense versus when to simply display out of stock.

Smart Strategies to Reduce Backorders and Stockouts

Use these eight practices to improve availability and make delayed orders easier to manage:

1. Forecast by product and location. Review sales patterns alongside promotions, seasonal demand, and planned customer orders. Investigate whether low sales reflect low demand or time spent unavailable.
2. Review reorder points and safety stock. Account for replenishment lead times and variability. Set buffers according to each product’s demand, storage cost, and consequence of a shortage.
3. Qualify alternative suppliers. Confirm product specifications, lead times, and usable quantities before relying on a backup source.
4. Confirm incoming supply regularly. Track supplier commitments and inbound shipment changes. Update customer promises when the information changes.
5. Keep stock and order records aligned. Distinguish inventory on hand, inventory already committed, and confirmed incoming stock. Limit new backorders to quantities the business can reasonably support.
6. Prepare receiving and fulfillment capacity. Schedule space, labor, and receiving appointments before delayed shipments arrive. Allocate received stock against outstanding orders using clear priorities. Consider on-demand warehousing for overflow inventory and cross-docking services when freight is ready for coordinated onward movement.
7. Give customers useful updates. State what is delayed, the current shipping estimate, when the next update will arrive, and how to request help or cancellation.
8. Offer workable alternatives. Discuss substitute products or partial shipments where appropriate. Confirm any price or delivery differences before changing the order.

When evaluating fulfillment services, ask how the provider handles receiving delays, stock allocation, and orders containing both available and backordered items.

When to Stop Accepting Backorders

Pause new backorders when you can no longer support the promise being made to customers. Warning signs include:

• The supplier cannot provide a credible replenishment estimate.
• Existing commitments exceed the incoming quantity you can reasonably expect.
• Repeated delays make customer deadlines unlikely to be met.
• Receiving or fulfillment capacity cannot handle the expected backlog.
• Product discontinuation, changes, or quality issues put supply in doubt.

Set limits by product and customer requirements. There is no universal eight-week cutoff that works for every business.

Stopping new orders does not resolve existing ones. Review outstanding commitments and tell affected customers what options remain.