Overstock.com, the online powerhouse launched in 1999, quickly established itself as a source for just about anything under the sun.
But as part of a recent and ongoing reinvention, the company now has a laser-sharp focus on furniture and related goods. The FAM’s Ray Allegrezza had a recent one-on-one with Overstock President Dave Nielsen to find out more.
1. When you rejoined Overstock, you had your work cut out for you. What did you do to not only stabilize the company but to put it on the path to significant growth?
Dave Nielsen: First, we needed to right-size our operations. We were hemorrhaging cash and needed to be able to show we could be a viable business long term. Second, focus. When I re-joined Overstock in 2018 after a three-year hiatus, the retail business had been largely ignored. Upon being appointed President of Overstock a few months later, one of my first priorities was to bring focus to our billion-dollar retail business. This focus meant investing in branding efforts to better define who our customers are and what they want from us. Ultimately, this work led to aligning the organization around a simple strategy that could easily be communicated. And, finally, I assembled a strong, collaborative leadership team to guide our employees with an aligned approach.
2. My understanding is the plan is to focus on furniture, but with a sharp focus. If that is correct, can you elaborate a bit?
DN: The furniture and home furnishings industry in the United States has a total addressable market of $390B and the online penetration rate is only thirty percent. There is much runway to maturity in the online penetration rate and Overstock has a real opportunity to continue to capture market share in this industry. Home furnishings has been a strength of ours since our inception over two decades ago. We have always been operationally sound and made money in the home categories. Implementing a more streamlined, focused approach toward furniture and home furnishings was deliberate – and it’s proving to be successful for us. We’ve had eight consecutive quarters of profitability since we began the transition to a focus on home and our vision of Dream Homes for All.
3. Word is that Overstock has identified two distinct customer types it wants to engage…the reluctant refresher and the bargain hunter. If this is the case, can you talk to me about how you identified these two types of consumers, what are their traits, and why are they important to you?
DN: As I touched on previously, in 2018, we organized a specialized team within Overstock to delve deep into our customer profile. This exercise identified two different customer personas and segments that make up 40% of the U.S. home furnishings market: savvy shoppers, whom we call Savannah, and Rebecca, a reluctant refresher. Savannah seeks smart value or, simply, the highest quality and style for her dollar. She gets a thrill from the good deals she finds. Rebecca is a more focused and intentional shopper. She’s looking to get the job done as simply and easily as possible. She’s looking for hassle-free, quality products at good prices. Both shopper segments like Overstock’s focus on smart value. They want a deal and they want to be confident in their shopping decisions. Savannah and Rebecca are woven into every aspect of our retail business today to ensure that we are building a shopping experience that highlights smart value, quality, and style — while delivering a positive, stress-free shopping experience.
4. What is T-zero and how will it impact your business?
DN: I am focused on our home furnishings and furniture business. I’m not personally involved with tZERO or any of the companies in our blockchain portfolio, but here’s what I can tell you about tZERO: It is one of 19 portfolio companies within the Medici Ventures Fund, a blockchain-focused fund managed by Pelion Venture Partners. tZERO was organized several years ago as Overstock invested in blockchain technology, something Overstock no longer does directly. tZERO is a leader in blockchain technology for capital markets. It aims to enable the market to securely tokenize and trade digitally enhanced securities. In January 2021, Overstock announced it would be converting Medici Ventures, its wholly owned blockchain-focused subsidiary, to a limited partnership. Pelion Venture Partners now manages the limited partnership fund, which means it oversees each of the Medici Ventures portfolio of Overstock’s blockchain companies. We believe that there is a strong financial upside to these portfolio companies, including tZERO, that may in the end provide more capital for us to continue to grow and expand our e-commerce business.
5. In the past, Overstock has had some interesting spokespeople…. Snoop Dogg, Mike Ditka, and Brett Michaels. What was the reasoning for affiliating with them? Was it a positive initiative? Are we likely to see more?
DN: I can’t speak to the strategies behind selecting those spokespeople, as I wasn’t involved in selecting them. However, with a clear understanding of our customer segments, we can better connect with them where they are. It’s possible we’ll see celebrity spokespeople or influencers in the future… for now, we’re laser-focused on connecting with customers to achieve our goal of sustainable, profitable market share growth.
6. When I have talked to vendors about Overstock, they tell me that Dave is the reason they trust the company. Does that suggest there may have been a time when there were trust issues in the past and if so, what did you do to make those vendors trust and respect you?
DN: At Overstock, we call our suppliers “partners” intentionally because we truly believe in a partner relationship – where we can work closely together and grow our collective businesses. One of our company values is to do good, and part of that is to do good by our partners; we treat them with care and respect and want them to feel valued. We believe for a partnership to be healthy, both parties should be able to make money and be profitable. Additionally, we have a fantastic internal team built out with quality leadership and industry experience that work every day with our partners to ensure our customers have a fantastic experience. I believe that those are the reasons why our supplier partners trust Overstock.
7. What is Overstock’s next big thing? (If this means you must kill me if you tell me, skip this question) 😊
DN: As mentioned, I strongly believe in the team’s ability to grow Overstock within the furniture and home furnishings space. There are several strategic initiatives and objectives we’re working on to help aid in this and I’m really excited about each of them. I can’t get into all the specifics but, to highlight a few: we’re expanding Overstock into Canada, a priority we’re passionate about succeeding in. Canada is an expansive and important market with great potential for us. Additionally, we’re working to grow and evolve our mobile app along with other user experience capabilities and technologies that will help optimize the way our customers interact with us and home furnishings assortment. More to come on that.
8. The company’s customer service is said to be world-class. What did it take to earn that reputation?
DN: Early on, we learned when we treat our customers right, they become loyal customers. Our customer wants an easy shopping experience and to be treated fairly. It is our job to ensure that fairness. Our customers know we have their back when things go wrong, and occasionally, they do go wrong. They want to be heard and recompensed fairly when spending their money. This mantra has guided our customer care teams and is behind our world-class service. It’s also a critical element of one of our three brand pillars – easy delivery and support – and centered around ensuring a top customer experience every time. At every level of the organization, we’re dedicated to meeting and exceeding customer needs.
9. In a sentence or two, Who or What is Overstock, and if a company could have DNA, what is yours?
DN: We are a customer-focused online furniture and home furnishings retailer powered by an incredible technology platform and team of technologists. Our DNA stems from three values; be you, know your numbers, and do good. We are committed to an outcome-driven, positive work environment that embodies a generative culture and spirit.
10. Covid has turned everyone’s cart upside down. How did Covid impact Overstock’s operations?
DN: The Covid-19 pandemic highlighted the importance of the home for many families around the world. Homes became offices, schools, playgrounds, and vacation retreats. This impacted Overstock operationally a few different ways. With a rise in demand for home furnishings, Overstock saw a rise in traffic, orders, and customer support. The pandemic and the various lockdowns also caused new supply chain challenges. Additionally, Overstock shifted to a remote work model overnight.
However, when I look at how Overstock adapted, given the unprecedented environment, I’m extremely pleased with the way our team navigated the challenges. Our internal teams managed work-from-home very well and we continue to work in that capacity today. Our broad and distributed asset-light supply chain network of thousands of partners and fulfilment centers helped ensure that we had competitively priced products and maintained above industry in-stock levels. Despite the challenges brought on by COVID, our best-in-class team was able to turn our business around.
11. Just about every retailer I talk to says other than logistics, the biggest challenge is finding and keeping great employees. Salt Lake is a desirable place to live, which might also mean competition for superior employees could be severe. How do you get sharp people like Brittany and Laura and keep them?
DN: Since 2019, our CEO Jonathan Johnson has focused on defining Overstock’s culture. Though we have a phenomenal global campus, complete with a day care, on-staff physician, and collaboration spaces, what truly defined our culture was the celebration of individuality, the common goal, and our desire to do good. Those guiding values have built quality leadership teams and thoughtful and highly competitive employee benefits.
Additionally, we recently implemented our Future of Remote Work and Re-Entry Design (FORWARD) plan. This structure leans heavily into remote work, with semiannual gatherings of the full company at our headquarters in Utah. This plan was devised around our employees and what they told us they wanted. The pandemic changed the way we work and what employees value. Flexibility is critical and it’s something I, as a leader, want every employee to feel like they’re getting at Overstock. This plan has also opened the door for us to hire employees across the country, giving us access to a broader and more diverse candidate pool nationwide.
12. Most of us are working some or all of the time remotely. How do you make your employees who may be working remote feel fulfilled and part of the Overstock family?
DN: As part of our FORWARD plan, the entire organization gathers in person semiannually for two days at a time at our headquarters in Utah. These in-person meetings are focused on collaborating, connecting, and celebrating. We held our inaugural gathering at the beginning of April and it was uplifting, energizing, and, most of all, fun. What a treat to come together after two full years away. We had thought-provoking breakout sessions to learn from, time for teams to connect, and opportunities to celebrate the massive achievements we’ve made since we’d last been together in March of 2020. Remote work has worked well for us, and we want it to continue because it’s what our employees want. With our FORWARD plan, the majority of our employees will only come to our office in person during these semiannual meetings. For other teams, they may come in monthly or quarterly. We are very focused on ensuring that the time we spend together in person is deliberate and purposeful and that we use that time doing the things we can’t do as well when we’re remote.
13. What makes you stand out from your competitors like Wayfair?
DN: Overstock is a home goods expert dedicated to providing smart value. We have strategically positioned ourselves to reach consumers that seek the highest quality and style for their dollar. When wallets are stretched, more consumers turn into savvy shoppers seeking smart value, and that’s where Overstock is unmatched. We pride ourselves on the experience we have built for our customers that help them find just what they want for less.
