Backorder in Distribution: Definition, Process, and Solutions

What Is a Backorder in Distribution?

A backorder happens when a customer places an order for a product that’s currently out of stock but will ship once it’s available again. Unlike canceled orders, these remain open in the system until inventory replenishes.

In distribution and wholesale, this situation usually occurs when demand spikes unexpectedly, suppliers experience delays, or inventory tracking is inaccurate. For distributors, backorders reflect strong customer interest but also highlight supply chain pressure.

Handled properly, delayed orders maintain customer trust while giving businesses time to restock. However, unmanaged backlogs can create frustration, missed revenue, and extra costs for both operations and customer service.

How Backorder Management Works in Practice

The backorder process connects sales, inventory, and procurement teams to ensure all customer requests are fulfilled once stock arrives.

Here’s how the process usually flows:

1. Order Received: A customer requests an item that’s unavailable.

2. System Update: The order moves to a “pending” or “on hold” status.

3. Supplier Replenishment: The distributor requests more stock from suppliers.

4. Automatic Fulfillment: Once goods arrive, the pending orders are processed automatically.

5. Customer Notification: The buyer receives updates on availability and delivery.

For instance, a food distributor might run out of a top-selling snack during peak season. The platform flags those items as on backorder and notifies both suppliers and customers. When restocks arrive, the system fills the earliest pending orders first.

Modern distributors use order management systems (OMS) to automate this process — tracking inventory across multiple warehouses and triggering updates in real time. This automation helps maintain transparency and accuracy, even during shortages.

Key Benefits of Effective Backorder Management

A reliable backorder strategy helps distributors turn temporary shortages into customer service wins.

For Distributors and Brands

• Customer Retention: Keeps clients engaged instead of losing sales to competitors.

• Accurate Forecasting: Historical order delays reveal where stock planning needs improvement.

• Efficient Inventory: Prevents overstocking while maintaining healthy fill rates.

For Operations and Field Teams

• Automation: Pending orders fulfill automatically once stock arrives.

• Visibility: Teams can track order status and shipment timelines in real time.

• Reduced Manual Errors: The system updates inventory and fulfillment data automatically.

In many cases, backorder insights help companies improve demand planning and warehouse allocation. When used strategically, they provide a feedback loop that strengthens the entire supply chain.

How SimplyDepo Supports Backorder Management

SimplyDepo helps distributors and CPG brands track, prioritize, and fulfill delayed orders efficiently within a single connected platform.

Using SimplyDepo, teams can:

• Monitor Real-Time Inventory: View which SKUs are pending across all warehouses.

• Automate Replenishment: Sync supplier orders with customer backlogs.

• Update Customers Instantly: Send order and delivery updates automatically.

• Align Sales and Logistics: Connect warehouse data to sales reps for transparency.

This approach ensures that every pending shipment is handled promptly. By automating communication and fulfillment, SimplyDepo reduces missed sales, improves customer trust, and keeps supply operations running smoothly.

With SimplyDepo, distributors maintain service quality even during supply shortages — ensuring business continuity and long-term customer satisfaction.