- Overstook CEO Johnathan Johnson wants the company to be the go-to destination for home goods.
- Overstock is the fourth biggest online home furniture brand, after Amazon, Wayfair, and Walmart.
- Johnson told Insider the ways the company is looking to beat out its competitors for the top spot.
Overstock has its sights set on edging out the likes of Amazon and Walmart to become the top-selling online home goods company.
Using outside data and analysis, Overstock places itself as the fourth biggest online home goods seller in the US based on category revenue. The company’s data points to its biggest competitors as Amazon, Wayfair, and Walmart, respectively. The company believes it recently overtook Target in the category. Now, the company says it is making strategic moves to grab a larger piece of the growing $325 billion industry.
After a particularly strong 2020 — thanks in part to a rise in demand for home furnishings and decor during the pandemic — Overstock continues to deliver strong results. On Thursday, the company reported revenue increased by 4% in the second quarter of 2021, up to $795 million.
According to Overstock CEO Jonathan Johnson, Overstock’s recent success stems in large part from steering the company away from an “identity crisis,” he told investors on Thursday. (Prior to Johnson’s appointment, the company had been mired in controversy surrounding Overstock’s founder and former chief executive Patrick Byrne, who resigned after publicly promoting and discussing his alleged involvement in “deep state” conspiracy theories.)
“When I took the helm, the business was unfocused, it was less disciplined, it was trying to do too many and often competing projects,” he said, noting the company’s foray into cryptocurrency and neglect of its e-commerce business.
Now, the company is “exclusively focused on furniture and home furnishings.” Johnson said. And this is a key differentiator between Overstock and Amazon or Walmart.
In an interview after earnings, Johnson discussed his strategic vision and what the company is doing to beat out competitors and dominate the online furniture market.
Doubling down on home goods
Though Overstock has historically sold a wide variety of products, Johnson made a strategic pivot to market the company primarily as a destination for furniture and home goods, spotting an opportunity to capitalize on a fast-growing market.
“Overstock, in its two-decade-long history, has morphed from a liquidator to a general merchandiser to now a home furnishing company,” Johnson told Insider. “We think there’s a lot of growth in that market. It’s not completely penetrated online, but it’s going that way.”
According to Johnson, he expects the home category to mirror other retail sectors like books which have experienced a massive and lasting shift to e-commerce.
“Frankly I think once a consumer purchases something online and has a good experience with it, it’s hard to go back to the old way,” he said.
Staying true to its customer base
According to Johnson, part of what sets Overstock apart from its competitors is embracing its position. The company is decidedly not an “inspirational” brand, but rather a no-frills destination for bargain goods designed for shoppers who “know what they want.”
“We’re really focused on who we are and who our customers are,” he said. “We’re providing smart value. We may not be quite as inspirational as Restoration Hardware or West Elm or even Wayfair, but we’re providing a better deal. The customer segments that we are going after are looking for quality for less.”
As consumers increasingly see the value in purchasing home goods online, Johnson said he believes they will subsequently tire of visiting brick-in-mortar locations where inventory might be limited. To that end, Overstock has worked on improving its search and browsing capabilities by investing in digital infrastructure both on its desktop site and mobile app.
Discoverability is an area where the leaders in online furniture diverge. When consumers search for a desk on Wayfair.com, they have more than 20 categories of filters they can use to narrow down their options including exact dimensions. On Amazon.com, Walmart.com, and Overstock.com that numer is around 15 or less.
“We’re so focused on improving product findability on our site, making it easier, faster, more intuitive for the person who’s looking for a mid-century modern leather sofa to be able to find that quickly,” Johnson said.
While Amazon is only just now considering allowing customers to make payments with cryptocurrency, Overstock has long been ahead of the curve: The company first began accepting bitcoin in 2015 and even launched its own cryptocurrency in 2017.
“If you don’t accept Bitcoin, it’s almost like saying you’re not going to accept PayPal or you’re not going to accept a certain credit card,” Johnson said.
“Frankly. I think if Amazon starts accepting cryptocurrency, I think it’s good,” he said. “It’s good for them. It’s good for the industry. It’s good for those of us that accept cryptocurrency already because I think it will make it more of a cash-like spending tool than a savings-like tool that it is today.”
Prioritizing accuracy over speed
Overstock was also early on dropshipping, a type of fulfillment method where the retailer doesn’t hold any inventory and instead acts as an intermediary between the customer and the supplier. While competitors utilize dropshipping, in part, to speed up delivery time, that’s not the priority at Overstock.
Fast delivery on the part of Amazon, Walmart, and Wayfair, come from massive warehouse networks (plus a store fleet in the case of Walmart) and armies of last-mile delivery contractors, built up over many years.
Overstock has opted not to meet those speeds, said Johnson.
“We’re very focused on accuracy of estimates, delivery estimates, and then communicating that to the customer at point of browsing, point of purchase, and post-purchase until delivery,” he said.
Overstock is intentionally choosing the opposite path of many of its competitors, which has drastically lower overhead costs.
“We like our business model. We’re asset-light. We don’t have lots and lots of warehouses,” Johnson said.