Managing Backorders and Pre-Orders During the Shipping Crisis

July 19, 2022

Lately, it seems there’s no good news coming out of the shipping industry. Want to buy a car? A refrigerator? New IKEA furniture? You’ll need to be put on a waiting list of six months or more or pay a massive premium for what used to be standard shipping. At this point, we may as well swap out FedEx for the Pony Express.

Those who work in the various industries connected to the shipping crisis (trucking, warehouses, transportation, ports, and container companies) are all citing massive worker shortages as a root cause for shipping delays. If there’s a bottleneck in any one of these industries, the entire supply chain comes to a standstill. Even more, there seems to be no incentive to add workers or improve infrastructure when many of these industries are making more money than ever off the shipping premiums and late fees they can charge.

Knowing how costly it can be to acquire and retain a new customer, eCommerce and brick and mortar stores are doing everything they can to avoid raising prices, delay shipping, or put popular items on backorder. In the end, however, many are left with little choice. It’s a helpless feeling when your inventory is running low due to factors outside of your control–but, as always, brands are finding creative ways to navigate the new normal.

 

When should I raise my prices?

Since mid-2021, businesses have been trying to meet rising consumer demand, only to find scarcity in both workers and products due to prolonged government and self-imposed shutdowns to the workforce. Add to that 2022’s decades-high inflation, and it seems there’s no getting out of raising prices on products your shoppers have come to love and even rely on.

If you’d like to maintain your ethical business principles and ensure you retain your customers for the long haul, consider asking yourself these questions posed by the Harvard Business School

  • Will raising the price of product X make up for the loss in sales of product Y?
  • Are there other ways to cut costs and make up the difference?
  • Does the increase in demand, or lack of supply, really justify an increase in price?
  • Will raising prices limit access to essential items for those in need?
  • Will making these changes inadvertently risk the health and safety of members of the community?
  • Are there unintended consequences that raising prices could cause?

They’re complex questions to ask yourself, but doing so (and answering them forthrightly) will likely help you feel better about raising prices and keep your shoppers’ faith. Studies exist to show that consumers’ fairness perceptions remain positive during a price increase when they are satisfied with the service and honest communication they receive from a brand.

With all that in mind, remember to proceed with caution: Have a plan in place to limit the amount of times you raise a price in a given year. No matter how loyal your customers are, they all have a breaking point (See: current Netflix stock prices).

 

5 Tips for Managing Backorders (+ 3 More for Pre-Ordering Customers)

Outside of raising prices, there are a few other pain points to address when the shipping industry is disrupted. These include ever-growing backorder times, an inability to fulfill pre-orders, and more. We’ll address these directly with creative solutions that’ll keep your customers around no matter how choppy the waters get.

 

How to Reduce Backorders

If you set up eCommerce as part of your shopping experience before the COVID-19 pandemic, you likely saw online sales rocket throughout 2020 and 2021. Experts indicate this behavior likely won’t end, even as the supply chain remains in its current quagmire. Unfortunately, the problem of fulfilling such unexpected demand remains in the form of backorders that can turn from a few days into months on end.

The first step in dealing with backorder issues is to ensure you have proper procedures set up for dealing with customer comments and complaints. Get multiple channels set up for communication (email, phone, web chat, social media, etc.) and address each issue with transparency, sincerity, and empathy. It’ll go a long way.

Outside of this important task, there are additional creative strategies suggested by longtime online retailer Staples to address backorders:

  1. Educate customers about alternative in-stock solutions with similar features in the same price range using any one of your marketing tools.
  2. Prompt your customers to place orders well ahead of time by providing off-season discounts or sales. You’ll have enough competition when Black Friday or Prime Day rolls around, so why not bump up your sale a few weeks?
  3. Stay on top of your eCommerce platform to set purchase limits or automatically hide out-of-stock products. You may even be able to add a “notify me” feature where customers can enter their email address–and now you’ve got a new marketing contact!
  4. Look into alternatives to your standard last-mile delivery services. Beyond USPS, FedEx, and UPS, services like DoorDash and Postmates have risen substantially in the last few years to help companies–including large ones like Walgreens and PetSmart–offer same-day local delivery or to fill the gaps left behind by the bigger haulers. 
  5. If you have a brick-and-mortar store, have a customer service solution set up to research your inventory and ship a possible in-stock item to the customer at no extra cost.

 

Fulfilling your Pre-Orders

On the flip side is the issue of pre-orders. They’re a great way to build up interest in your brand and get people hyped (especially if you’re interested in “FOMO” (Fear of Missing Out) marketing), but if you slip up in fulfilling your pre-orders, you likely won’t get another opportunity. Gamers everywhere will remember how they felt the day Sony announced they couldn’t fulfill PlayStation 5 pre-orders. Don’t be like Sony.

Instead, consider utilizing these three tactics to execute a successful pre-order strategy during the current shipping crisis. 

  • Prepare for a pre-order shortage by acting like you’ll have a pre-order shortage. No matter how small the product launch is, it’s all hands on deck time. Get everyone on your team on board; check in on the bandwidth of your website, hire a specialist launch team to assist with customer inquiries, and set up an email workflow weeks in advance to keep your customers informed. WorldFinance.com indicates that “simply limiting ambitions a bit might be the best solution” when it comes to pre-orders in today’s climate. In other words, don’t get too greedy and always remain vigilant.
  • Consider limiting your pre-orders to VIP customers. While pre-orders are a great way to build hype for new customers, retaining and even converting customers to VIP status could build out your success across a much longer period. If you’re concerned about your ability to fulfill pre-orders, try making them available only to your VIP customers if you have them. If you don’t, a pre-order campaign is a great time to establish one! Reward your customers’ loyalty and build interest in getting others to join your program, and you’ll enjoy long-term success versus a flash in the pan.
  • Use group buys for your new product to better estimate future bulk needs. Most times, pre-orders fail not because of the brand, but because of a slip-up with their vendors or suppliers on launch day. Avoid this contingency by putting the onus on your shoppers instead. Enact a group buy campaign instead of a pre-order to get customers to reach a minimum order quantity (Kickstarter is a great example of this). It’s a great tool to estimate future bulk needs as well, so you’re always on top of your inventory. One caveat is that you won’t want to start manufacturing any new product until you can guarantee people want it, which may lead to delays of its own. On the other hand, shoppers will be more willing to wait knowing this ahead of time.

 

Control Your Own Destiny

Unfortunately, the forecast for the current shipping crisis isn’t great. That’s still no reason for business owners to sit and wait for things to “go back to normal” (in many cases, they likely won’t anyway). As always, the best brands are the ones who pivot and stay flexible when challenges arise.

If you’re running into roadblocks navigating issues like this, our blog page is a great place to start for keeping ahead rather than playing catch-up. Don’t hesitate to contact us as well for help with eCommerce management or getting a handle on your Amazon Advertising. A consultation is a great way to learn where your pain points are and how we can help with our broad range of specialized capabilities.

Share with a friend: