Supplier relationships played a key role in the decision to transition Overstock to the Bed Bath & Beyond brand, according to company executives.
Overstock relaunched its e-commerce site under the Bed Bath & Beyond banner at the beginning of August after buying the intellectual property from the bankrupt store chain of the same name for $21.5 million in June.
As Jonathan Johnson, who stepped down as Overstock’s CEO this week, explained to analysts on an Oct. 26 earnings call, consideration for suppliers coupled with hopes of reaching a broader customer base helped drive the decision to change the Overstock name — a fixture in online retail since 1999 — to Bed Bath & Beyond.
Having two separate websites for Overstock and Bed Bath & Beyond initially “would have created confusion for our supplier partners and required challenging operational workarounds,” Johnson said. “Thus, we elected to run a single site.”
Overstock was courting Bed Bath & Beyond suppliers well before the retailer fell into bankruptcy and shuttered its stores. It won over new suppliers who were worried about Bed Bath & Beyond’s financial state and ability to pay, Johnson told Supply Chain Dive previously.
More suppliers have done so since the company bought the Bed Bath & Beyond name and the rest of its IP. Johnson said in October that management has “learned that many new supplier partners are eager to engage in our newly acquired brand.”
Johnson also pointed to the company’s legacy suppliers and noted, “We believe that it's important to protect these partners’ investment in this relationship and leverage their historical knowledge.”
For former Bed Bath & Beyond suppliers, working with the new company will entail operational and financial changes. Overstock was one of the early pioneers of the drop-shipping model, with vendors shipping directly to retail customers from their facilities. Johnson said that the new Bed Bath & Beyond site was launched in the U.S. “under our unique asset-light operational model.”
While currently running just a Bed Bath & Beyond-branded site for now, the company plans to launch a separate Overstock site by late 2024 that will be focused on inventory liquidation.
That, too, is a decision influenced by the company’s relationship with its suppliers. “We will work with former, existing and new supplier partners to provide an outlet for clearance merchandise and deal-seeking consumers,” Johnson said. “We feel strongly that our tribal knowledge and the white space around this business model makes this the right move.”
Despite the rebrand, Overstock’s sales fell 19% year over year in Q3, marking the online retailer’s seventh straight quarter of double-digit sales declines. GlobalData Managing Director Neil Saunders said in an emailed note that, for now, the company’s Bed Bath & Beyond-branded site “comes across as a seemingly random selection of homewares — which is a problem Overstock has always suffered from.”