A peek into Overstock’s pivot from liquidator to furniture retailer

Overstock.com was founded in 1999 right after the dotcom bubble earlier that decade, which gave the site the opportunity to sell off failed companies’ merchandise at a discount.

More than 20 years later, the company has pivoted to selling furniture and home furnishings, as competition across the e-commerce landscape has vastly expanded. Three and a half years ago, the evolution began when CEO Jonathan Johnson helped pinpoint the types of customers that fit with Overstock’s new vision, and then made it a reality.

• For six quarters, the company did away with its non-home products, which represented only 20% of Overstock’s revenue, Johnson said.
• During that time, Overstock doubled the number of home and home furnishing SKUs it carried on its site.

Who is the new Overstock customer? The company realized prior to its transition that customers who purchased home products came to the site more frequently, converted at a higher rate, and had a larger average order value than those who came for non-home items.

• “People who were buying health and beauty, apparel, jewelry, watches, and electronics didn’t have the same loyalty and were much more one-and-done customers,” Johnson told Retail Brew. “So it’s because we’ve focused on who we are, we’ve also become better at who we are.”

It’s been a year since the company completed its transition, and it has identified two kinds of customers it wants to target moving forward.

• The first are those Johnson described as the “savvy shopper” who wants the best value for the best product available.
• The second customer segment is the “reluctant refresher”—someone who may not be as deal conscious as the savvy shoppers, wants to be able to find a product easily, and wants an easy return experience post-purchase.

Snatch and steal: Under those two segments, Overstock is bringing another customer into the fold—former Bed Bath & Beyond shoppers. But targeting these shoppers didn’t start with the company’s bankruptcy in April, it actually dates back to last year.

• Johnson explained that Overstock isn’t an everyday-low-price retailer but rather a “high-low” retailer—one that competes for customers through sales, promotions, and coupons, a strategy similar to that of Bed Bath & Beyond.
• So last year, when some of Bed Bath & Beyond’s struggles became more apparent, Overstock started carrying small appliances and giftable products that were carried at Bed Bath & Beyond, including Mr. Coffee, Keurig, KitchenAid, and Dyson.

“We really felt like we took market share from Bed Bath & Beyond in the second half of last year and in the first quarter of this year by focusing on products that their customers want and need, and then continuing to be a smart value high-low retailer that speaks to the Bed Bath & Beyond customer,” Johnson said.

Looking ahead: Overstock still has a lot of work to do in the coming months and years for the pivot to stick. In Q1, company revenue was $381 million, a decrease of 29% YoY. The company also had 4.8 million active customers by the end of quarter, a 35% YoY decrease.

• Johnson said Overstock has recently launched a co-branded credit card with Citi retail services, made updates to its mobile app, and will improve its private-label credit card to bring new customers into the fold.

“I think this goes to event-tizing and really finding a way to get people to see they’re getting the best deal,” he said. “People are willing to spend when they know the deal is there.”