|How do you handle "backorder" orders?|
I was wondering how do you handle "backorder" orders?
For example, I received an order for a product that I have to "backorder" from my wholesaler and it can take 1-2 weeks to arrive to my warehouse.
So I can either:
1. Email the customer and tell them that the product needs to be backorderd and can take 1-2 weeks to arrive to our warehouse. And then give them the option if they still want to purchase the product or cancel.
2. Email the customer and tell them that the product needs to be backorderd and can take 1-2 weeks to arrive to our warehouse. But just go ahead and place the order and tell them it will arrive as soon as we get it from our wholesaler.
As far as I am concerned as a customer I would be demanding my money back from you and would never return to your site. If you do not have an item in stock you should state so on the site so that your customers have the choice of whether they want to wait, or go elsewhere and get their item when they want it.
To not have an item in stock, allow it to be sold on your website and then contact the customer to say you don't have it and it will take weeks to get to them is unacceptable business practice. As you can probably tell I have had this happen to me on a number of occasions and it is at best frustrating, and at worst financially catastrophic for the customer.
It should be possible for you to either remove this item from sale when you don't have it, or state on the item description how long delivery will take.
So in answer to your question, definitely give them the option to cancel, and don't expect them to return to your site as a customer.
We always email the customer notifying him that the product has been backordered and give them approximate date of delivery. We have never had a cancellation due to delay however, the delay never exceeded 1 week.
|2. Email the customer and tell them that the product needs to be backordered and can take 1-2 weeks to arrive to our warehouse. But just go ahead and place the order and tell them it will arrive as soon as we get it from our wholesaler. |
Heck, we don't bother to email if the delay is just going to be a few days. OUR customers almost never mind a brief wait. If we don't have the item, our competitors are even more likely to be out of it. Our FAQ says shipment can take up to a week or two.
Contacting customers by email is unreliable and slow. When we NEED to contact them, we telephone, btw.
If a customer orders several items, we offer to partial ship what we have. 90% of the time they prefer to wait for the complete order.
Of course we aren't selling insulin to diabetics or rattlesnake anti-venom. It's a little sad to me when our buyers are pretty unexcited about getting our utilitarian products. :)
Thank you for your replies!
Well we don't charge the credit card until we ship the product; so there is no need to demand their money back since no money was transfered.
Since I'm just starting out with this ecommerce venture I don't have the resources right now to add a real live inventory system to my website. But eventually if everything goes well I will like to add a live inventory system to my website.
I did reply to one customer giving them the option to cancel and they were actually very nice and said we have a great customer service and thanked us for giving them that option because one of the products were going to be a gift. They ended up canceling 1 product since it was going to be a gift, but they still ordered their other product; so I guess it depends on the customer if they return or not.
Yes, I was also leaning towards using "OPTION 2". However, since it is the holiday season and I'm guessing most orders will be gifts I've been using "OPTION 1" for backorders during the holidays only.
I'm not tied into any of my distributors' inventory systems, and items are moving in and out of stock so rapidly right now that I could spend all day just updating what I have on my site.
If I know that an item is not going to be available for a long time, I put in bold type, "Out of stock until December 20," or something like that.
On items that come and go quickly, I'll tell the customer immediately if it's not in stock. I'll give the customer the option of canceling the order, or getting $10 off if he/she will wait a week or so. Almost everyone chooses to take the $10 offer.
This has come back to bite me a couple of times when the item that my distributor told me would arrive in a week arrives the next morning, and I've already given the customer $10 off. That's the breaks, though.
"Almost everyone chooses to take the $10 offer."
I'll bet almost everyone would wait without the $10 discount. A website isn't a vending machine where a shopper puts in money and a product infallibly arrives on the doorstep precisely in 48 hours. Not these days!
With the deteriorating economy all sorts of things will go wrong. I just finished "suspending" sales of one vendor who is probably in financial collapse. And yes, some do ship faster than expected.
For the very rare customer who needs precise delivery info, we urge them to call us toll free. But even our suppliers often can't say exactly. How do we handle that? Well, we're darn good at apologizing :)
|we're darn good at apologizing |
Likewise. One benefit of doing this job is I can now spell the word inconvenience correctly...
|you should state so on the site so that your customers have the choice of whether they want to wait, or go elsewhere and get their item when they want it. |
This is the solution we've arrived at. It's a little more work to set up and maintain, but what we do is:
- when items are received, we enter them into inventory on the site.
- all items display what's in stock.
- in case they don't "get it," when they go to check out, it checks the status of every item in the cart.
If all items are in, "All your items are in stock, continue . . . " OR
"One or more of your items are not in stock. Would you like to
* hold entire order until items come in [link]How Long?[/link]
* ship items in stock and out of stock items when they come in at no additional shipping charge
* remove out of stock items form my order and continue to checkout"
.... Accompanied by obvious link to "how long" describing the worst case scenario of arrival of out of stock items (5 days - 2 weeks)
Most people remove the items, but a rough guestimate is 20% order with the options "hold order" or "ship what ya got" so I think this is working.
jsinger, I know that many people will wait without the discount, but more will not. That's why I started offering it. Rocknbil's 20% is an illustration of what I'm talking about. I'd say that 80% to 90% of the people I offer discounts to agree to wait.
While my margins are slim, I'd rather have some money than no money. Also, by offering them a discount, I'm building up the perception of good customer service. I'm at the mercy of the manufacturers, which is something I subtly remind customers of (oh, those big bad companies). I email the customer right away, offer the choice of canceling or a discount, and then follow up when the item is shipped and after it's delivered. All of that seems to impress the customers.
We made it a policy/feature of or store to ONLY sell what we have in stock. If the item is out of stock, it is clearly marked, and they cannot add it to their cart. But each industry could be different.
Actually (from the MasterCard rules 5.7.2:
|The record must not be presented until after the products are shipped or the services are performed unless, at the time of the Transaction, the |
Cardholder agrees to a properly disclosed delayed delivery of the products or services.
So as long as the customer knows there might be a delay, the transaction should not be completed.
Are there merchants who violate this? Sure. Some are fined - depends on the nature of the violation. You might even find you get a chargeback (30) (Services Not Provided or Merchandise Not Received). just be careful and let your customers know / understand there might be a delay. Too many of these chargebacks and you might end up on the TMF / MATCH list
|The record must not be presented until after the products are shipped... |
So ship the products and THEN see if the card is any good? What exactly does "the record must not be presented" mean?
How does that work in a store: Hand the jewelry to
the customer and then run the credit card?
A shipping delay is common with high end items, as well as items which are handcrafted.
You can either accept the order and ship it when it becomes available or send a note to the customer such as 'these usually ship within 1-2 weeks'.
If you want to be safe wait a day before ordering it from your supplier should the customer cancel after being informed. Or, just order it without saying anything and give the customer the option of canceling if they call to do so.
If it's a really involved item you can call the the customer and inform them about the time. Should they change their mind before the time discussed you can in all fairness refuse to cancel the order.
It also depends upon the product, a handcrafted watch is expected to take time and having it arrive immediately can lower it's perceived value, while getting a blender is just needed.
|So ship the products and THEN see if the card is any good? |
Similar to the 2006 banking logic that says to make the home loan THEN see if the borrower is creditworthy.
Normally when a transaction is posted (authorization), a batch settlement is completed in less than 24 hours. During this time period (Merchant Balancing / Capture / Clearing / Interchange / Settlement), the merchant is sending the product.
A gateway will allow a merchant to do a pre-authorization, which then money is held for the merchant, usually three business days. During this time, the merchant can do a post-authorization / sale if needed. Being a consumer, check some of your credit cards during this season if you are using a few of them. You will probably see some pending authorizations.
|just be careful and let your customers know / understand there might be a delay. |
Does that have to be done by email/phone for each specific transaction? Why not a general TOS or FAQ notice that some shipments may be delayed for various obvious reasons?
Furthermore, the confirmation email we automatically send customers upon receipt of every order says that delays can occur.
Who does the fining of miscreant sellers? MC/Visa?
It could be specific enough in the emails. TOS - does the customer agree to them before buying?
Fines could come from MasterCard / Visa or the acquiring bank / processor. Chargeback fees are from the issuing bank to the acquiring bank to the merchant account provider to the merchant. Usually things flow downhill.
Well, if I might play devil's advocate here (keep in mind, IANAL, just speculating)...
It's perfectly legal to take payment well before shipment. This payment is then called a deposit, right? You can, in point of fact, take a deposit of 100% of purchase price prior to shipment. I'm should think many forum members have placed a deposit on an item, so we're all pretty familiar with the process and terminology.
However, what if, in your TOS, you state that you take a deposit of 100% of purchase price at the time any internet/card not present order is processed regardless of stock level. Then, mention that not requesting a lead time/stock level check before ordering is a violation of the TOS. Take into consideration this most recent MySpace case about violating TOS being "hacking"...you could effectively make it your customer's responsibility to check with you regarding availability of products. Think you'd have a leg to stand on in court? or against a chargeback? If your TOS/actions are in violation of the credit card company's and their actions are a violation of yours, who wins that pissing match?
Unfortunately, legal & the card associations are completely different. And if a consumer knows and understands the rules and regulations of the card association, a chargeback can happen.
Let's say I ordered a product and you told me it would be delivered on 12 Dec. I give you the American Express number to charge. I see the pre-authorization on the website on the 10th for $1,000.00. 12 Dec comes and goes and the product is delivered on the 14th. The consumer can call American Express and tell them the service / product was not promised on the specific date and you want your money back. American Express is well known to protect the cardholder and give them their money back. You get a chargeback and really cannot do anything about it because the consumer told them the date of service was incorrect.
If this happened to be a special order and shipping fees are $200.00, the merchant can be out that money as well, even though the TOS might state something different.
Now of course, you can take the consumer to court or sell the chargeback (this is where you make sure you add fees on fraudulent chargebacks). And then maybe sell this account to another company for pennies on the dollar to let them handle it. Or you take them to small claims court to get your money back. (Search for sell your chargebacks for some more information.)
|legal & the card associations are completely different |
Except that the card associations are beholden to the same laws as the rest of us. Legally, who has the final say? "Your" TOS or theirs? Isn't their TOS what governs chargeback disputes?
It's our responsibility to be in stock. We will take an item out of stock if necessary. If listed in stock and ordered, then that is another mistake and we eat the shipping for the back-order after informing customer by phone. It is our fault; we won't charge the customer for the extra shipping cost, and we do not try to manipulate them out of the item or into 'waiting'.
Rarely an issue for us though. We might get caught on a slow moving item that suddenly sells six months worth in a week - it happens. However, we never run out of any key items and taking secondary items out of stock on an emergency basis is not going to cost us any business. Though not in vogue, we do not run inventory thin or 'just in time'. The product is going to turn, so I don't mind having too much over not enough. If shelf life is an issue, we take that into account.
Vendors can be a problem of course. Some will ship an order for thousands of dollars that day and inventory planning is not a factor. We know the truck will roll in within a week. Others need two or three weeks to do anything. If the vendor is reliable, we can work with almost any specified lead-time. Unreliable vendors get fired. Unreliable industries (unfamiliar with professionalism from end to end) are not for us.
|Except that the card associations are beholden to the same laws as the rest of us. Legally, who has the final say? "Your" TOS or theirs? Isn't their TOS what governs chargeback disputes? |
It depends. No matter what your TOS says, depending on what the customer tells the issuing bank, the customer might get his money back.
That's why you write something in your TOS, make sure it is legal in your state by having an attorney review it and then any fraudulent chargebacks that happen, sell them (or Judge Judy :) )
A simple "I was not happy with the product" to the issuing bank and chances are the money is returned. What about the product? The customer "returned" it to the merchant. In court, the customer would be requird to provide proof that he returned it. To most issuing banks, the proof is because he said so.
|Except that the card associations are beholden to the same laws as the rest of us. |
Not if they have the clout, lawyers... and you don't.
Have never had any serious issues on chargebacks or fraud <knock wood />. Maybe it's different for the big boys, but for small-time merchants and developers like myself it is cheaper and safer to eat the loss of any complaint as fast as possible. Sometimes - good business. Sometimes - the short end of a corrupt situation, but can't afford to throw money or time on the principle of the 'right thing'. Off the original topic, but the phrase "because he said so." seems to be the unfortunate truth.
As stated, we have been fortunate to have had very, very few problems, but have had personal experience with others who have - and heard some pitiful sad stories.