Predictions of e-commerce big Overstock.com’s impending demise have been rampant in early 2020 and the corporate’s inventory was hovering at an all-time low on March 13 of that 12 months — the day President Donald Trump declared a nationwide emergency within the face of the rising COVID-19 risk.
However lower than two years later, the corporate is hitting file efficiency numbers, its inventory worth is up over 2,000% and the oft-maligned furnishings and residential items retailer is outperforming lots of its opponents.
That every one-time inventory low hit only a few months after longtime Overstock government Jonathan Johnson took over the helm as CEO following the unsavory exit of mercurial founder Patrick Byrne amid widespread fallout from Byrne’s public feedback about his involvement in a “deep state” conspiracy and investigations into Russian interference within the 2016 U.S. presidential election.
Johnson had led the corporate, based in 1999, via a few of its most affluent years. However earlier than accepting a board appointment to fill Overstock’s prime spot following Byrne’s exit in August 2019, he’d spent the earlier six years or so overseeing Medici Ventures, an Overstock funding subsidiary centered on blockchain know-how startups.
Whereas Overstock noticed early success as one of many pioneers of on-line procuring, the corporate discovered itself slipping amid an evolving market that turned rife with aggressive opponents within the e-commerce residence furnishings area of interest.
However Johnson was able to steer a brand new course when he grabbed the wheel of the Overstock ship simply forward of pandemic shutdowns.
“In 1999, e-commerce was a nascent trade certainly,” Johnson said in a Deseret News interview following his appointment to CEO. “In 2019, it’s a way more mature market with quite a few greater gamers. Overstock has discovered an important area of interest specializing in residence items … and the enterprise has rotated within the final quarter. There may be actually a spot available in the market for Overstock to develop and thrive, be worthwhile and generate constructive money stream.
“We see a shiny future for retail.”
That shiny future arrived sooner, maybe, than Johnson had anticipated when on-line procuring noticed an unlimited enhance as COVID-19 shutdowns and residential isolation pushed customers to on-line choices.
In an interview this week, Johnson mentioned the arc his firm has traveled beneath his management and what the longer term bodes for Overstock.
And, to make sure, Byrne’s messy departure coupled with the corporate’s efficiency struggles offered Johnson with big challenges from the outset.
“After I turned CEO, Overstock was shedding market share, shrinking and shedding cash,” Johnson stated. “It was clear to me we would have liked to regain give attention to what we do finest and convey worth to our shareholders.”
That started, Johnson stated, with a wholesale retuning of Overstock’s method to constructing its enterprise that included changing a 27-point initiatives plan with a four-point roadmap that centered on hitting goals and measuring success based mostly on key outcomes. The transfer, Johnson stated, offered “readability of function at each degree of the corporate.”
Johnson additionally disbursed with executive-level micromanagement and allowed these closest to operational points assess and implement their very own options. And the adjustments, Johnson stated, mirrored positively in an organization tradition that was altering earlier than his eyes.
As it will end up, the timing of Overstock’s reset and retooling was extremely fortuitous as enterprise, Johnson stated, exploded quickly after.
“In March 2020 when many people have been compelled to isolate and do business from home, enterprise started to take off,” Johnson stated.
Whereas the recurring buy of books, garments, electronics and different smaller shopper items have lengthy been adopted by internet buyers, the furnishings and residential furnishings sector has seen considerably slower to draw and retain clients.
However then all of it modified.
“During the last decade the house furnishing market has been migrating to on-line gross sales at a price of about 1% to 2% a 12 months,” Johnson told the Deseret News in August 2020. “On the finish of 2019, about 23% of these purchases have been on-line.
“The pandemic has accelerated that and what have been three to 5 years of progress has occurred in months. We’re now about 36% of purchases taking place on-line.”
COVID-19 restrictions and limitations additionally helped gas a doubling of gross sales volumes, a tripling of latest clients and skyrocketing buyer retention charges, Johnson stated. And maybe most importantly for the once-struggling retailer, the corporate has been recapturing market share.
Whereas Overstock’s share worth is down from a peak north of $121 per share final summer time, the corporate’s inventory was buying and selling at over $70 per share on the shut of standard buying and selling on Wednesday, incomes the retailer a market capitalization in extra of $3 billion.
Notably, Overstock additionally introduced a inventory buyback effort final month and is about to spend $100 million on excellent frequent shares. The transfer is extensively seen as an indication of the corporate’s personal confidence in continued constructive efficiency.
“At this time’s announcement demonstrates our confidence in our enterprise and our capability to ship sustainable, worthwhile market share progress,” Johnson stated when the buyback program was introduced on Aug. 17. “This share repurchase program is aligned with our dedication to strategically deploy capital the place we imagine we are able to drive the best worth for our shareholders and underscores the power of our steadiness sheet.”
And market watchers that have been as soon as, and never that way back, sounding the demise knell for Overstock at the moment are almost unanimous of their assist of “purchase” suggestions and are roundly bullish on the corporate’s prospects.
None of it comes as a shock to Johnson who’s, and has been, quietly assured in his firm’s capability to each degree up and keep its momentum, whilst shopper habits proceed to ebb and stream.
Quite a few components, apart from the pandemic, will proceed to maintain Overstock effectively positioned in its market, Johnson stated. Document housing begins, continued excessive charges of private financial savings and, maybe most importantly, a procuring public that’s newly comfy with shopping for, say, an 8-foot sofa on-line.
“Twenty years in the past, folks have been hesitant to purchase books on-line,” Johnson stated. “A decade in the past, the identical might be stated of buying clothes from a web-based supply. However, these industries all underwent secular shifts and that’s what we’re now seeing within the furnishings and residential furnishings. For an rising variety of customers, procuring at a brick-and-mortar retailer is being changed by a greater expertise.”