Dive Brief:
- Overstock is attracting more suppliers after buying Bed Bath & Beyond’s intellectual property in a bankruptcy auction for over $20 million in June. Overstock officially relaunched under the Bed Bath & Beyond name last week with a merged website.
- CEO Jonathan Johnson told analysts in July that the company’s funnel conversion rate, a metric tracking the merchandising team’s success in reaching out to prospective vendors, has increased 60% since the acquisition.
- “Simply put, knowing we will be operating as Bed Bath & Beyond has made us more attractive to supplier partners,” Johnson added.
Dive Insight:
When a large retailer fails, analysts often try to predict how that player’s market share and customer base will be distributed among competitors. But suppliers also need somewhere to go when one of their retail partners closes shop.
Overstock had been courting Bed Bath & Beyond suppliers prior to the latter’s Chapter 11 and store liquidation. Johnson told Supply Chain Dive earlier this year that the company brought on Bed Bath & Beyond vendors in categories, including small appliances, new to Overstock amid Bed Bath & Beyond’s growing financial distress and risk of losses to suppliers.
The onboarding of new suppliers has picked up with the IP acquisition, which Overstock has used to brand itself under the Bed Bath & Beyond name.
“The merchandising team is clearly seeing the tailwind from attaching our business model to the well-known and much-loved Bed Bath & Beyond brand name that ranks much higher than the Overstock brand name in its association with home,” Johnson said on the company’s earnings call in July.
Johnson went on to explain that Overstock has historically had an 80% overlap with Bed Bath & Beyond’s vendor base. “However, in the past some of our partners have not offered us their entire catalog of these branded home products,” Johnson told analysts. “That is now changing in a meaningful way.”
Overstock’s SKUs have increased by 600,000 since early July when news of the Bed Bath & Beyond acquisition broke, Johnson noted.
The boost from the Bed Bath & Beyond brand comes at a critical time for Overstock, which has been losing sales in recent quarters. Overstock’s revenue fell 20% in Q2 and the company posted an operating loss of $4 million. Neil Saunders, managing director with GlobalData, called the company’s earnings a “grim set of results.”
Based on GlobalData analysis, Overstock has “fallen off the consumer radar somewhat and is not drawing in customers, even to browse, like it used to,” Saunders said in emailed comments.
The Bed Bath & Beyond acquisition offers some assistance there, as it is “a much more powerful, much better-known brand than Overstock” despite Bed Bath & Beyond’s struggles over recent years, Saunders added.
The brand power of Bed Bath & Beyond is in large part the attraction for suppliers. “Over time, we will sunset the Overstock logo and brand. Customers and suppliers like the Bed Bath & Beyond brand,” Johnson said on the call. “So do we. That is who we are becoming.”
