Pre-Order vs. Backorder: Understanding the Key Differences
The terms “pre-order” and “backorder” are often encountered in the world of e-commerce and retail, and while they both involve purchasing items that aren’t immediately available, they represent distinct scenarios with different implications for both businesses and customers. Simply put, a pre-order is for a product that hasn’t yet been released or is not currently in stock and is ordered before it becomes available, while a backorder is for a product that was previously available but has sold out, and the order is placed after it has run out of stock. Understanding this fundamental difference is crucial for managing customer expectations and making informed purchasing decisions.
The Nuances of Pre-Orders
What is a Pre-Order?
A pre-order allows customers to purchase an item before its official launch or availability date. This often applies to new products like video games, books, gadgets, or limited-edition merchandise. The core idea of a pre-order is that the product has never been available for purchase before and is only scheduled to be available at a specific future date. Businesses use pre-orders to gauge interest in an upcoming product, generate initial sales, and build anticipation before launch.
Key Characteristics of Pre-Orders:
- Future Release: The product is not currently available for immediate shipping or pickup.
- Anticipated Availability: There’s a scheduled release date or an expected time frame for when the product will be available.
- Guaranteed Product: Customers pre-order to secure their copy, often ensuring they will receive it shortly after release, especially for limited items.
- Building Hype: Pre-orders are used by companies to create a buzz around a new product and establish early demand.
The Specifics of Backorders
What is a Backorder?
A backorder occurs when a product that was previously in stock is now out of stock, and the customer still places an order for it. The product might be in production, awaiting a shipment from the supplier, or there might be a delay in its availability. Unlike a pre-order, a backorder implies the product has been available in the past, just not at the time the order is placed.
Key Characteristics of Backorders:
- Previously Available: The product was in stock and available for purchase before selling out.
- Out of Stock: The product is currently unavailable for immediate shipping or pickup due to depleted inventory.
- Future Fulfillment: The order will be fulfilled when the product is back in stock.
- Temporary Situation: Backorders are generally temporary situations aimed to replenish stock based on existing and recent demand.
Pre-Order vs. Backorder: A Side-by-Side Comparison
| Feature | Pre-Order | Backorder |
|---|---|---|
| ——————- | ——————————————- | ———————————————- |
| Availability | Product has not been released yet | Product was previously available but is now out of stock |
| Timing | Order placed before product is available | Order placed after product is out of stock |
| Purpose | To secure product at launch, build hype | To satisfy demand when inventory runs out |
| Expectations | Customer expects to receive product after release date | Customer expects to receive product when it’s back in stock |
| Typical Products | New Releases, Limited Editions, etc. | Popular items, staples, when supply lags behind demand |
Why Businesses Use Pre-Orders and Backorders
Both pre-orders and backorders are strategic tools for businesses, but they serve different purposes:
Reasons for Pre-Orders:
- Gauge Demand: Help companies understand the interest in a new product before it’s available.
- Secure Early Sales: Create a revenue stream before the product’s official release.
- Generate Excitement: Build hype and anticipation around a new launch.
- Manage Inventory: Allow companies to plan for production and distribution more effectively.
- Guarantee a copy: Ensures the customer has a guaranteed copy of the product upon release or shortly after.
Reasons for Backorders:
- Maintain Sales: Allow customers to still order when stock is low.
- Minimize Lost Sales: Capture sales that would otherwise be lost if out-of-stock items weren’t available for backorder.
- Manage Inventory Levels: Help businesses replenish stock based on current and recent demand.
- Maintain Customer Loyalty: Provides a means for customers to get the product they want despite the delay.
Frequently Asked Questions (FAQs)
1. What is “Pre-Order Back Order”?
“Pre-Order Back Order” refers to a situation where a product, before its release, sells so well that pre-order numbers exceed the initial stock planned. This essentially means that for some pre-orders, customers will experience a delay in receiving the product, similar to a regular backorder.
2. Does Pre-ordering Mean You Have to Buy It?
Pre-ordering generally implies a commitment to purchase the product once it’s available. However, some retailers might allow cancellations, typically within a certain period. Review the terms and conditions before placing a pre-order.
3. Are Pre-Orders More Expensive?
No, pre-ordering itself doesn’t make the product more expensive. The price is usually the same as the standard price when it’s released. The benefit of a pre-order is securing a copy, not a lower price. However, pre-order campaigns can offer incentives or bonuses for early purchases.
4. Why Do Companies Want Pre-Orders?
Pre-orders allow companies to build product exposure, generate hype, and estimate demand. They also secure early sales and help with production and inventory planning.
5. What Happens When an Item is on Backorder?
When an item is on backorder, the customer can still place an order, but delivery will be delayed until the product is back in stock. The customer is generally informed of an estimated waiting time.
6. How Long Does a Backorder Typically Take?
Backorder times can vary. On average, it can take between 14 and 21 days for a backorder to be fulfilled, but some can take significantly longer depending on production schedules and supply chains.
7. Is a Backorder the Same as “Out of Stock”?
While both terms indicate a product is currently unavailable, “out of stock” may imply the product is discontinued or temporarily unavailable without a clear timeline, whereas “backorder” implies the product will be available again at a future date.
8. What is the Difference between Backlog and Backorder?
Backlog represents the entire history of unfulfilled orders, whereas backorders are specifically orders for items that are currently out of stock. Backorders are a part of the overall backlog.
9. What are the Costs Associated with Backorders?
Backorder costs can be direct, like added shipping or rush fees, or indirect, such as loss of customer trust or delayed revenue. Businesses need to analyse these costs to optimize inventory levels.
10. What Products Typically Go on Backorder?
Common items that go on backorder include popular consumer goods, items with high demand, and products that experience supply chain disruptions.
11. How Do Pre-Orders Increase Sales?
Pre-orders increase sales by creating a sense of exclusivity and guaranteeing early access. The urgency and buzz around new products encourage early purchases.
12. When Did Pre-Ordering Start?
Pre-ordering became popular in the 1980s particularly within the gaming industry as a way for customers to guarantee their copy of a physical game.
13. Are Pre-Orders Charged Immediately?
Typically, pre-authorization holds are placed on credit cards for pre-orders, but the actual charge is often processed when the product ships. This pre-authorization hold is temporary and does not constitute a full charge.
14. How Long Does a Pre-Order Usually Last?
Pre-order periods vary, but they usually last from a few weeks to a couple of months before the official release of a product. A week to two months is considered a good timeline for most products.
15. Can I Cancel a Backorder?
The ability to cancel a backorder often depends on the retailer’s policies. Many retailers will allow cancellations if the wait becomes too long, but be sure to verify their return policies.
Conclusion
Understanding the difference between pre-orders and backorders is essential for consumers and businesses alike. Pre-orders offer a way to secure upcoming products, while backorders allow continuous ordering despite temporary stockouts. By knowing the nuances of each, both businesses and customers can manage expectations, plan effectively, and ensure a smoother shopping experience.