While Macy’s may not have their festive trees and ornaments up for another three months, it’s not too early to start planning for the Holiday season. If this year’s season resembles anything close to 2009, it may be worth your time to read about how Shipwire deals with ”backorders” in the event of a strategic or unplanned “stockout”.
What you have in stock does not have to control your sales. And the ability to take backorders is important to business, especially during the holiday season. You can sell products that aren’t in stock, pre-sell upcoming items, or just oversell inventory knowing that new supply is on its way to keep money rolling in the door and your customer happy. “On its way” can mean with your supplier, in transit, getting through customs or on the truck to the warehouse.
Lets get a few definitions squared away:
A “backorder” is, a customer order which cannot be filled now, and for which the customer is prepared to wait for some time. Backorder management is a sales tool. Many businesses entice customers to order an item that is on backorder by putting them at the top of the list when it arrives, or offering a discount or complimentary gift.
A stockout is when you don’t have stock. It can be because you ran out of stock or didn’t have it yet but continued selling in anticipation of stock coming in (aka backorder). This is a common occurrence, especially when incoming goods are delayed in customs or you don’t have real-time inventory metrics (note, Shipwire can help your with both).
Once you do make the backorder sale, you may want to consider Billy Joel’s “Honesty” and let your customer know when it’s coming or if the anticipated date ever faces further delays. Remember, controlling backorders is to enhance your customer experience, so make sure to follow through and dont’ leave customers “hanging” or wondering when their backordered item will be ready. Even if you do allow your customers the option to cancel before receiving the new inventory, consider throwing in a freebie for your customer so that they feel better about the fact that they paid for something that they couldn’t take home immediately. Remember getting a lollipop or a balloon at the Dentist, sometimes it made the pain a bit more bearable. You want to show your customers they are appreciated and you want them to come back and shop with you.
There are two important parts to navigating the backorder equation. The first part is sending inventory to Shipwire in a timely manner so we can complete the second part – fulfilling the backorder and thus allowing you to have fantastic customer service and an efficient inventory control. Last holiday season, Shipwire noticed a sharp increase in merchants taking in orders for stock that was in route (“backordered”). The closer the holiday shopping season got the higher the stresses for everybody: The end buyer desperately needing that item for a X-mas gift (at what age does procrastination end?…seriously), the merchant trying to follow through for their customer, and Shipwire living up to the Holiday expectations that Santa Claus could relate too.
Here’s how the Shipwire backorder system works:
- You’re out of stock but you set your shopping cart to continue to take orders.
- These orders automatically route to Shipwire and are listed on hold due to “backorders”.
- The manufacturer’s shipment comes to Shipwire warehouses (Ideally with time to get the order out to your buyers with a bit of room to spare).
- As the inventory is received and processed the stock is marked as “good” instead of “pending” in your accounts inventory counts. The Shipwire system then notes there is “good” inventory for your “backorders” and auto-magically transforms those orders from “back-ordered” to live orders and the warehouse will begin processing those shipments.
Last holiday season we processed a lot of backorders and our merchants were mighty pleased with the way the system automation worked. Generally, it’s nice to take in orders and not have to worry about circling back to see if the much needed inventory arrived. We’re expecting this holiday season to be another year of heavy back-orders and some of our summer account dashboard changes were specifically undertaken to make it even easier for our users to get visibility to their backorders.
Please avoid last minute jams by making sure your inbound shipments are on the way so you can sit back while your backorders are filled on time. Or maybe use your free time to figure out what flavor lollipop would be nice to give to your backordered customer (I’m positive a grape Charms lollipop would make me feel better about ordering something that is out of stock).
And Santa… go ahead and take a vacation this Holiday season… we got it covered.