Another ‘down side’ of drop shipping is managing backorders. Backorders occur when a customer orders and pays for something that you cannot provide. This happens more often with drop shipping because when you aren’t in control of the stock, stock levels will change and deplete without your noticing. While they can be minimized with automation discussed in the aforementioned blog post, backorders are a fact of life in a drop ship business model. Here are a few tips for handling them.
Get an ETA – ETA is “Estimated Time of Arrival” and is often expressed as a date. The best drop ship suppliers will have ETA dates built into their system so that when you place the order you can see when it’s expected in. This gives you something to tell the customer so they’ll in turn know what to expect.
Keep the Customer Informed – If you cannot provide the item right away, it’s important to inform the customer. Tell them what the ETA is and give them options (such as offering to cancel the order if they can’t wait). You should have a template email prepared for this so that you can easily fill in the blanks to personalize the email for them.
Have a System for Follow-up – It doesn’t do much good if you have backorders and never follow up on them. It’s important to have a system in place so that you can see what backorders you have at any given time and how long they’ve been pending.
Establish an Ending Date – In addition to having a follow-up system, you should have a stop loss date or ending date. If we can’t provide a backordered item within 30 days, we refund the customer’s money and send them a note letting them know. It could be 30 days or it could be something else, but you don’t want to have a backorder just sitting in your file for months and months. If you’ve collected the money, you are under obligation to provide the item or refund it.
Backorders in a drop ship business model are largely out of your control and the best thing to do is have a plan in place to effectively deal with them. What about you? Do you have backorders and how do you deal with them?