Inventory
Backorder vs stockout: what is the difference?
Backorder means a customer can still order a product that's out of stock; you ship it when new stock arrives. A stockout means the product has run out and can't be bought at all. The difference is whether you keep the sale: a backorder delays it, a stockout usually loses it.
Backorder vs stockout: the difference
| Backorder | Stockout | |
|---|---|---|
| Can the customer buy? | Yes, and waits for delivery | No |
| What happens to the sale? | Kept, unless the customer cancels | Usually lost, or goes to a competitor |
| Customer experience | Waiting, needs clear communication | Disappointment, may not return |
| Best when | Restock date is short and reliable | Never ideal |
| Main risk | Delays, cancellations, support tickets | Lost sales, profit and ad spend |
A backorder is a choice you make when you run out. A stockout is what happens when you run out and haven't made that choice.
What a stockout really costs
The most visible cost is the sales you miss. Using the stockout revenue loss estimator's default numbers:
Worked example: a week out of stockExample numbers
| Input | Value |
|---|---|
| Normal daily sales | 15 units |
| Average selling price | $35 |
| Gross margin | 45% |
| Days out of stock | 7 |
- Lost revenue = 15 × $35 × 7 = $3,675
- Lost gross profit = $3,675 × 45% = $1,653.75
That's only the direct cost. Stockouts also cost you:
- Wasted ad spend. Ads still running to an unavailable product pay for clicks that can't convert.
- Customers you don't get back. A shopper who buys from a competitor during a stockout may stay with them.
- Visibility. Sales channels and search results tend to favor products people can actually buy, so a long stockout can take time to recover from.
How to enable backorders on Shopify
Shopify calls this Continue selling when out of stock. It's set per product or variant:
- In your Shopify admin, open the product (or variant).
- In the Inventory section, make sure inventory is tracked.
- Select Continue selling when out of stock, then save.
A few points from Shopify's help center worth knowing:
- The option only works when inventory tracking is on for that product.
- If you have multiple locations, only stock at locations that fulfill online orders counts toward what's available online.
- Shopify POS staff can still sell out-of-stock items at the register; the setting is about online sales.
The setting doesn't tell customers anything on its own. Add a clear note to the product page, such as an expected ship date, so nobody is surprised.
When backorders make sense
- The restock date is close and reliable, such as a shipment already in transit.
- The product is hard to substitute, so customers are willing to wait.
- You can communicate clearly, with a ship date on the product page and in the confirmation email.
They're a poor fit for products with uncertain supply, low-priced items where customers will just buy elsewhere, and anything time-sensitive, such as gifts close to a holiday.
Want this handled automatically?Forecast demand and know exactly when to reorder, before you stock out or tie cash up in overstock.Try Verve AIHow to communicate backorders
A backorder only keeps the sale if the customer knows what they're signing up for.
- On the product page: show that the item is on backorder and the expected ship date, close to the Add to cart button.
- At checkout and in the confirmation email: repeat the expected date, and say whether the rest of the order ships now or waits.
- If the date slips: tell customers straight away, and give them the choice to wait or cancel.
- Make canceling easy. A customer who can cancel easily is far less likely to dispute the payment.
The legal side in the US
The FTC's Mail, Internet, or Telephone Order Merchandise Rule applies to online orders. In short:
- You need a reasonable basis for any shipping time you state. If you don't state one, you must be able to ship within 30 days.
- If you can't ship on time, you must promptly ask for the customer's consent to the delay, with a revised date, and offer the option to cancel for a full refund.
- Refunds for canceled orders are generally due within seven working days.
This is a summary, not legal advice. Check the FTC's guide, and the rules in any other country you sell to.
How to prevent stockouts
- Set reorder points from real sales and lead times. The reorder point calculator does the math.
- Hold safety stock on best-sellers, sized with the safety stock calculator.
- Plan peak season early, when demand rises and suppliers slow down. See the guide to lead time.
- Watch days of stock remaining on your top products weekly, not just total units.
FAQ
What does 'available on backorder' mean?
It means the product is out of stock right now, but you can still buy it. Your order is placed and paid for, and it ships once new stock arrives.
What does 'backordered' mean on my order?
At least one item in your order was out of stock when you bought it. The seller will ship it when it's back in stock, sometimes separately from the rest of the order.
Is a pre-order the same as a backorder?
They're similar. A pre-order is usually for a product that hasn't launched yet, while a backorder is for an existing product that's temporarily out of stock. Both take payment or an order before stock is available.
Should I charge customers for backorders up front?
Shopify's built-in setting takes the order and payment as usual. If restock dates are uncertain, some stores use a pre-order app that delays payment until the item ships. Whichever you choose, tell customers the expected ship date before they buy.
Do stockouts hurt my ads?
They can. If ads keep running to an out-of-stock product, you pay for clicks that can't convert. Pause or exclude those products from campaigns until stock returns.