Home Ecommerce Not Always About The Money: Overstock Builds Products To Drive Loyalty, Not Revenue

Not Always About The Money: Overstock Builds Products To Drive Loyalty, Not Revenue



Most people think of Overstock.com solely as a discount ecommerce retailer, which is no surprise considering the company ranks No. 31 in Internet Retailer’s recent list of the nation’s biggest e-tailers.

But Overstock also features a range of services beyond ecommerce that aren’t intended to be revenue generators, but are instead designed to turn general browsers into loyal customers and source a richer pool of consumer data.

These below-the-radar products include Worldstock, a marketplace for global artisans, Farmers Market, a back-end technology solution that connects consumers who want farm-direct food with local farmers, the first open insurance exchange for auto and home insurance, a pet adoption service and a marketplace for new and used cars.

Those may seem tangential to Overstock if you think of the company as a provider of “discount furniture and pillows and toasters and things like that,” said Overstock CEO Patrick Byrne. But more and more, Overstock sees its platform as a way to build a distinct consumer set out of its 30 million unique monthly viewers and 10 million-12 million loyal customers by finding other ways to solve problems and find cost savings.

For instance, Overstock’s Farmers Market service, which now covers ZIP codes accounting for 44% of the US population and is expected to cover more than 50% by July, aims to do to the agribusiness supply chain what Uber did to the taxi and limousine industry. By connecting people directly with a supply source, users can skip the margins skimmed off by incumbent middlemen.

Though the 7-month-old service hasn’t had time to influence the company’s media budget yet, Overstock expects to be able to turn it into a valuable marketing pool.

Byrne spoke with AdExchanger about the strategy and technology that underlies the company’s moves into new verticals, and how that expands the company’s core business.

AdExchanger: What are the kinds of customer analytics that go into developing these products?

PATRICK BYRNE: It comes from two things. First, we provide anonymized data to partners who evaluate that … and they can come back and say, “Hey, your customers, they’re buying fans, but they’re not buying fans from you.” Second, [we’re] looking at our demographics. For example, we skew over 60% female with a $75,000-85,000 household income – so that drives things like pet adoption. That’s a more female-oriented endeavor.

What’s the technology behind Farmers Market and these services?


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We’re doing a lot of back-end work, because farmers markets typically don’t have good technology, and we can build a platform that they can plug into.

We have APIs and an EDI. … It’s a very robust platform across our business for all kinds of sellers, who do things like load up on our site and through us sell on Overstock or eBay or Walmart.com, across lot of the Internet through our platform.

Do marketing partnerships or PR opportunities factor in?

We don’t develop them with PR in mind, but sometimes they surprise us. Worldstock, which we developed in 2001, has received lot of good publicity, but I meet a lot of people casually who tell me they shop there and Overstock because they appreciate that we do that. It pays off more in brand association than in column inches.

Have you found that moving into these somewhat adjacent industries gives you a better vision of that kind of “Overstock person” you referenced before?

Yes. For example, people who shop on Worldstock are loyal customers; same with the pets. If they’re a pet lover and visit our pet tab – which took a couple hundred thousand to build, basically as a social service – what we’ve learned is, their likelihood to buy from Overstock more than doubles.

Are any of these significant revenue generators? Or more incremental or even along the lines of a social service where the revenue is insignificant or nil?

They contribute in less direct ways. Worldstock is the only one that I would mention that’s significant: tens of millions of dollars per year in revenue. But it does those other things too, in terms of getting people to buy from Overstock and be loyal. I’d also say cars has done well. … [Our car marketplace] makes from half a million up to a million per year in revenue generally.

Any plans to branch into new verticals, or even a move into brick-and-mortar?

I doubt you’ll ever see us be brick-and-mortar. Liquidation doesn’t work too well in brick-and-mortar. But you will see us develop other product lines. We’re doing a lot with credit. For example, we do one kind of credit (such as purchasing an expensive piece of furniture by opening up a line of credit) and have others on the way. You’ll also see us offer video on demand and things like that.

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