What is a 'Backorder'?

A 'Backorder' refers to an order placed for a product that is currently out of stock, but for which the supplier expects to be able to fulfill the order once the product becomes available again. This term is commonly used in inventory management and supply chain processes, indicating that while the item is not available at the moment, the demand for it still exists, and the expectation is that the item will be delivered once it is back in stock.

This concept is essential in sustaining customer satisfaction, as businesses can keep orders active instead of canceling them due to temporary stock outages. Customers are often willing to wait for specific items, especially if they are in high demand or considered essential. Thus, understanding backorders is vital for efficient inventory management and customer communication.