How Much Backorder is On the Books

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One 12 volt distributor has $5.4 million on the books in backorders.  Another has over $6 million in backorders.

Not a single distributor or supplier wished to state their backlog for the record, but we are attempting to provide here some idea of the backlog levels companies are facing.

One second-tier supplier has $6.2 million on the books in backorders.

Smaller distributors said their backorders were in the range of $500K to $1 million. And a mid-to-large sized dealer said it had over $3 million in total backorders.

3-store chain Audio Express in VA said it has $50K on backorder with each of its top two head unit suppliers alone, echoing several other suppliers who said the same.

A retailer with a total of $3.5 million on order said that amount would cover about 6 months of inventory.  “We’ll take the risk to take everything they have,” said the buyer.

A distributor told us some dealers are ordering at the rate of 2-3X their annual volume per vendor.  If a dealer typically orders $20K in goods, chances are he has $4o- to $60K on backorder.

“Is that a problem,” we asked?  “Not at all,” he said. “They’ll sell through it eventually.”  Many retailers told us the same, although some worried about taking delivery on such a large an order all at once.

“We wouldn’t be in trouble,” said one leading retailer.  “But we wouldn’t be buying for a while.”

The backlog in orders was exacerbated in the past few months by price increases instituted by many vendors.  Dealers scrambled to beef up their orders before the cut off for the new pricing.

But the fact remains, as summed up by a leading distributor, “Right now every dealer I’ve got would take every box I could ship them.”

 

 

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2 Comments

  1. It could get worse if China invades Taiwan & Taiwan is prepairing for this event
    as of now. China is also taking over businesses owned by Taiwan in China and arresting them
    that are still in China A lot of them own OEM car audio companies. Some have left trying to get factories running in Thailand but if invasion hits China I’m sure will freeze all assets in Taiwan wich will stop factories they own in other countries

  2. Hope everyone remember to review their insurance:
    – for carrying the extra inventory
    – if offering extra credit – to insure some of that to reduce risk

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