Definition

Backorder rate shows how many orders your company cannot fulfill when a customer tries purchasing an item. A high back order rate means your customers are forced to wait while you attempt to fill their order, which will adversely affect your customer's satisfaction and retention in the long term.

Formula

Backorder Rate = (# delayed orders due to backorders / total # orders placed) x 100

Backorder vs. Item out of stock

An item is out of stock when your company doesn’t have the item in inventory and has no sure date to restock, or the item is seasonal or a limited run. Backordered items are expected to be available in a reasonable timeframe.