Overstock.com refocuses on its roots in B2B sales
June 12, 2015 03:30 PM
One of the recent special deals on Overstock.com breaks new ground for the 16-year-old web-only merchant—$1.13 million for a wholesale offering of jewelry pieces—all 1.13 million of them.
“We’ve never had a lot this big,” says Seth Marks, senior vice president of merchandising, sourcing and strategic initiatives. A “lot” is a wholesale term for products offered for sale as a single group of items.
The deal, of course, works out to $1 per item, among jewelry ranging from fashion watches to diamond-inlaid titanium rings and jeweled music boxes. Overstock says the average retail price per item in the lot is just under $20, with pieces like the diamond-inlaid rings retailing on Overstock for about $80.
Although Overstock has never offered a wholesale lot of merchandise quite as large, two years ago it offered one nearly half as big—400,000 handbags—and it has about 50 more mammoth deals in the works, Marks says.
Offering such large volumes of products in single lots is also recalling some of the early days of Overstock.com, which launched in 1999. When the company was young CEO Patrick Byrne would visit retail company liquidations to acquire large lots to sell in bulk at wholesale as well as to break up and sell as individual items to consumers.
Although Overstock went on to focus more on retail sales—it’s ranked No. 31 in the Internet Retailer Top 500, a ranking of companies by annual web sales—the e-retailer is now stepping up its wholesale efforts to refocus on acquiring and reselling large lots, Marks says.
It has a new team of 12 merchandise buyers, analysts and coordinators, headed by Dylan Simon, special acquisition merchandise manager, who focus on finding, evaluating and acquiring large lots of merchandise. And it offers bulk sales of merchandise through O.biz, a wholesale-only site it launched in 2009; on the Liquidations section of Overstock.com; and in special sections of Overstock.com. The $1.13 million lot of jewelry, for example, was featured on a jewelry product page on Overstock under the banner “Once in a Blue June Bargains.”
Marks says the strategy of offering large quantities of merchandise at fire-sale wholesale prices enables Overstock to satisfy its goal of quickly turning inventory. He notes that Overstock typically turns its inventory about 40 times per year. “We want to spin inventory, not get emotional about keeping it,” he says. He adds that there is never a shortage of merchandise liquidations that give the company an opportunity to acquire new products. That’s important to maintain fresh merchandise to keep customers returning to check out what’s new.
In the case of the 1.13 million-item lot of jewelry, the company was able to offer it at $1 per item because it had already made its money on other merchandise, Marks says. Overstock acquired the 1.13 million jewelry items last year in a liquidation of Bidz.com, when it acquired tens of millions of dollars worth of merchandise, much of it more expensive jewelry. “We’ve made our millions already on this inventory,” Marks says. “Much of it was fine jewelry and precious metals.”
Overstock’s goal is to sell the remaining lot of 1.13 jewelry items in a single bulk sale, though it will consider selling some of the items in smaller groups, Marks says. When it offered the lot of 400,000 handbags, it sold about half in a lump sum to a wholesaler, the rest in small groups or as individual items, he adds.
To make its wholesale lots more attractive as bulk purchases, Overstock offers a loyalty program that provides a 5% rebate on purchases of all order sizes.
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