Out Of Stock vs Backorder and Why 50 Percent are Wrong

I run a small ecommerce business with a couple of partners and deal with making sure things move forward on the technology side. If you're into web, then you've probably heard of schema.org and the necessity of having your products tagged with schema markup for the interwebs.

On my sites, I have a place where I can set the availability of a product:
In Stock
Limited Quantity
Out Of Stock
On Backorder

Currently (as of 2020) Schema.org does not have an option for BackOrder, only OutOfStock.

Several years back, I put in a request to have BackOrder added as an option because sometimes, things are on BackOrder, they aren't simply out of stock. This discussion didn't go very far, however a newer duplicate issue was formed and had some activity on adding Backorder.

In my quest to present relevant information, I ran across a blog post for an online shipping management company (shipbob) where they explain the difference between Out Of Stock vs On Backorder and after reading through it, I realized that my view of the two definitions, was different than what others in the industry thought.

Interestingly, (tl;dr) Investopedia thinks the other way about Backorder.

This led me to some quick searches and what I discovered is that roughly 50% of the people out there who have to deal with these kinds of availability statuses think one way and the other 50% think the other way, which means that 50% of those dealing with these two availability statuses are wrong.

One group thinks that Out of Stock means the item has to be ordered back in so it might be a while before the item arrives and Backorder means it's been ordered and on its way to the warehouse.

The other group (the one I'm in...) thinks the complete opposite where Out of Stock means the item isn't available today, but more are on the way and it should only be a few days. Backorder on the other hand would mean that the item has no ETA on when it will actually be available due to supply chain issues.

Here's how my group thinks about the flow of availability:

PreOrder > InStock > LimitedAvailability > OutOfStock > BackOrder > Discontinued

So what is the "right way" of doing it?

Thinking about how to update the latest Schema issue on the matter, I came up with an analogy that should make enough sense for why Out Of Stock comes before BackOrder and is the standard that you should adhere to.

Let's take the example of a grocery store. You have a shelf with 10 cans of beans on it. At 1:00PM, a customer comes in and buys all of the cans of beans. That product is now "out of stock" because it certainly isn't "in stock"...

Here's the real question: "Does the grocery store have more in the backroom and they simply need to refill the shelf? Or is the grocery store completely out and they need to order more?"

If they have more in the back, the store manager would tell the stock boy to go get more from the back and put them on the shelf so they're "In Stock". So, In Stock -> Out Of Stock. The store can quickly refill the stock, much like an ecommerce store that knew the quantity was low (Limited Quantity), and has already placed an order for more but they're waiting on the next shipment to come in which could be today, tomorrow or maybe next week. Maybe they have actual stock in the warehouse, but someone forgot to reset the counter, much like having product in the back room of the grocery store, but the stock boy hasn't had a chance to restock it yet.

Now lets say the grocery store didn't usually sell many of these beans, and this customer literally bought everything they had so there's nothing in the back room. Not only are they out of stock, but they must now order more. Let's go even further and say that the bean company that makes the beans, had a fire at the bean factory and they are going to be 3 months before they can ship out another order of beans. The beans aren't discontinued but they also aren't going to be available for a while either. So what would the grocery store manager tell the next customer who came in looking for those beans? They're "out of stock"? Isn't that obvious to the customer standing in front of an empty shelf looking for the beans?

Instead, the grocery store manager would probably say: "I'm sorry, those beans are on back order from our supplier because we just found out the bean factory burnt down and has to be rebuilt." Which makes a lot more sense than: "I'm sorry, those beans are out of stock from our supplier because ... the factory burnt down ..."

So based on this analogy, you can see where Out Of Stock should always precede Backorder when dealing with the availability of a product.

Let's say the customer asks: "Where are these beans? I can't seem to find them." and the manager says: "They're on backorder." The customer responds with: "Ok, so when will they arrive?" To which the manager says "Oh, they don't need to arrive, they're in the back room, we just haven't had a chance to restock them." I guarantee the customer would stare at the manager and slow-blink them. It ... just ... doesn't make any sense to say an item is on back order when it will be restocked in a very short period.

Out of Stock vs Backorder

Out of Stock simply means that it's not currently available for purchase but should be fairly soon.

Backorder means there is no ETA on when the product will be available again.

Conclusion

Let's all stop making this one way or the other and stick to a standard way of thinking about it. At the end of the day, it's not for us, it's for our customers.

B&H Photo Video has a great way of dealing with both "Out Of Stock" and "BackOrder" by simply saying More on the way. Maybe that's how we should start approaching it.