HERE’S How Overstock Makes Money in 2022 [Full Business Model]

Every customer seeks discounts, especially when buying goods online. The leading eCommerce giants endorse several discount deals to tempt buyers. Most of those discount deals are just useless, especially when comparing prices on other platforms. 

But there are a few online retailers that actually deliver what they promise. And Overstock is one of them! It has become popular as the best eCommerce platform for buying high-quality merchandise at super competitive prices. It is not as popular as eBay, Amazon, or other eCommerce platforms, but its business model is quite inspiring. 

This post reveals the Overstock Business Model and the secret of this American internet retailer’s success. 

What is Overstock?

It is a USA-based eCommerce company, specializing in selling furniture and other goods. Patrick M. Byrne had created Overstock.com in 1999. He wanted to sell only returned and surplus merchandise through this website. Thus, it got the name “Overstock”.

There were several failed dot-com companies and Overstock was liquidating their inventories. It used to sell furniture and other supplies at the most reasonable prices. Thus, it survived for more than two decades and became a popular destination to buy new, used, and custom-made furniture. 

Overstock now sells home décor, bedding, furniture, kitchen, lighting, home improvement, and many other products. It provides closeout merchandise at pocket-friendly prices and many new items at normal rates. 

It initially focused only on the USA’s market, but later became a global platform. Today, Overstock provides good quality merchandise in various categories worldwide (more than 90 countries!) Overstock has numerous loyal customers due to their surplus pricing which is very affordable.

overstock global 2

Overstock History

Overstock is the brainchild of Dr. Patrick Byrne. He proposed that retailers could empty their excess inventory by selling merchandise on the internet. The online market was in its infancy period at that time. Most retailers used to close their channels due to a limited supply of products. 

eCommerce market took off and then Byrne decided to launch a new website to sell the chosen goods. Thus, he established Deas.com without securing any third-party funds (bootstrapped). The goal was to offer fair deals and invest in valuable goods. 

This new website was drawing numerous buyers and Byrne had sold merchandise worth up to $100,000. It was an unbelievable success for a website, which was designed specifically to help companies get rid of excess inventories. 

The business was going great and then Overstock.com replaced the company name. It continued to generate huge profit for the founder and the New York Time listed this website as one of the most visited websites on the internet.

The company had generated over $1.8 million in revenues that year! It was one of the most successful businesses when online shopping was a new thing for many people

Overstock was doing pretty great, but Byrne wanted to expand further. His goal was to make Overstock more successful than Amazon in the next five years. The company was sourcing its merchandise from dying dot-com companies and selling them online at affordable prices.

Byrne decided that there is scope to add more goods by adding closeout merchandise from distributors, brick-and-mortar retailers, manufacturers, catalog companies, and importers. He bought many items at the cheapest possible prices and sold them online at profitable rates. 

Overstock went public in 2002 because it was performing way better than many eCommerce platforms at that time. It continued to grow and added new product categories. Its business model is still the same, but the scale of operations has multiplied manyfold.

Thousands of consumers use this platform to find high-quality goods and buy them at affordable prices. It may soon become the world’s largest online furniture retailer! 

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Overstock Business Model

Overstock follows a multi-sided business model. Both merchandise suppliers and customers are Overstock clients. It brings both parties on the same platform. Customers deal directly with suppliers to buy goods they need for the home or workplace.  

overstock business model

Customers 

Individuals looking for high-quality furniture, home décor items, kitchen products, rugs, etc. use this platform to find affordable deals. This platform provides merchandise in more than 15 unique categories. Therefore, it is a one-stop destination for buying most household goods and other products. 

Suppliers

Overstock.com provides a well-established platform to individual vendors, manufacturing companies, and distributors. They can list products in suitable categories and promote those products to find clients. Whenever customers buy a product, a percentage commission goes to Overstock and the rest goes to the retailer. 

As the name suggests, Overstock.com majorly lists excess merchandise from various brands, shops, and companies. Sellers also list new products to gain new customers. However, most buyers need budget-friendly deals and therefore surplus products are always in high demand. 

This platform is beneficial for both parties. Buyers get cost-effective deals and sellers get a chance to get rid of excess merchandise quickly. 

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Overstock.com Value Proposition

This platform has grown exponentially because it creates value for every involved party in the business. It offers better price, accessibility, convenience, and a brand name to trust. 

Many merchandise suppliers find it quite difficult to sell all the products. They need to get rid of old items so that they can create space for new products. Selling goods with little or no profit is possible when the seller does not want to face any loss. Therefore, most retailers choose Overstock.com to sell surplus merchandise. 

It is convenient for consumers too! Buyers find quality products at affordable costs. They get better discount deals than local stores and therefore they visit overstock.com quite often. Minimum overhead costs, fast shipping, and affordable shopping encourage buyers to provide this platform with free publicity. 

Overstock has become a global brand. Its success and longevity have drawn millions of buyers to this platform. It offers satisfying customer service. That’s why the National Retail Federation in the USA has offered this company 4th rank for consumer satisfaction. 

It is not possible for brick-and-mortar furniture stores to provide merchandise quality Overstock offers at affordable prices. Therefore, many agencies, experts, and influencers have praised this platform for its unique business formula. 

What Channels Does Overstock Use to Serve Clients?

This company operates through its official website. It uses various social media platforms and online ads to promote its services. Overstock also got an official mobile app. Now, many loyal customers are using this application to get notifications on new product deals. 

This company frequently runs ads on TV, radio, websites, and printed magazines to find new buyers. Besides, it uses the latest digital marketing methods to reach new customers and generate leads. 

Just like other eCommerce companies, Overstock.com is using every available platform for marketing. It may not be as popular as Amazon, but those marketing methods have drawn millions of buyers. Therefore, Overstock always gains new sellers and buyers to run its business. 

How Does Overstock Make Money?

Overstock has become a global supplier of affordable furniture and household items. It was impossible to achieve if this platform could not find suppliers with high-quality merchandise. Numerous third-party sellers are using this marketplace to sell products in various categories. 

Overstock invites sellers to list their products in various categories. Product listings are pretty cheap on this platform. Besides, the website charges a 3% commission fee on each sale. Thus, sellers get the most out of a good deal. 

Overstock has got millions of sellers and millions of products listed on its official website and application. Numerous buyers are always looking for budget deals on good furniture, and Overstock gets a cut from each sale.

This platform invites sellers from all over the world to list and promote their products. There will always be buyers on this platform to find cost-effective deals. Sellers, who list beautiful, durable, and reliable products at a reasonable cost, can quickly empty their inventory. That’s a promise Overstock makes to all the registered members. 

How Do Sellers Market Products on Overstock?

Overstock offers an equal opportunity to sell products. Its sellers use listing boosters to market their merchandise online. Retailers can highlight products and list them in an appropriate category to increase product visibility. This platform provides many online tools to promote the brand and product for a quick increase in sales. 

Smart resellers also try other methods of increasing sales. Affiliate marketing, SEO, social media marketing, and other digital marketing techniques help sellers draw more buyers to their products. Thus, they generate qualified leads and quickly get rid of all the listed merchandise. 

How Does Overstock Maintain Its Customer Base?

All the buyers know that Overstock got the best deals on useful items. Many competitive sites offer budget-friendly deals, but buyers still return to Overstock. This platform offers the most exciting shopping experience in comparison to other online marketplaces. 

Modern buyers got tired of traditional shopping techniques. They seek excitement and most eCommerce platforms fail to make online shopping exciting. It is like treasure hunting on Overstock.com. Every visitor hunts for the most pocket-friendly deal on the required product. 

Buyers often spot deals way better than they were expecting. Therefore, they quickly buy the listed item and receive it within 3 working days. Overstock also changes the product line quite consistently to entertain existing and new customers. Thus, it keeps excitement levels up for buyers by offering interesting products with the best discount offer. 

Is It Daunting for Overstock to Survive in Today’s Business Environment?

Modern buyers are not fond of waiting several minutes to find the required product. eCommerce platforms list hundreds of products under the same category. Things get messy when search results are out. All the featured results confuse buyers and push them away from the platform. 

Overstock.com is a clean website where buyers can find products in more than 15 categories. It is so simple to explore this platform. Buyers get several results related to the typed keyword. Many high-quality items appear on the search result page. Most of those products are way cheaper than their fresh counterparts. Therefore, people buy them and use them for years. 

Is Better to Sell on Overstock than Local Stores?

The number of sellers has never decreased on Overstock. This company was established to help manufacturers, distributors, and sellers in emptying their surplus stock. It has been active for more than 2 decades and it is still serving. 

Most retailers may prefer selling out of this marketplace when the product’s demands are high. It gets daunting to find new buyers when merchandise gets older. That’s when retailers list their products to get rid of unsold, returned, or worn items. It’s a win-win deal for retailers who can’t afford a physical store to sell products. 

Conclusion

Overstock was established with a unique idea of selling surplus and used furniture items. It has generated huge revenue over time and expanded its operations globally.

It is a successful eCommerce platform and it may soon outperform already established online marketplaces. That’s why it is a huge threat for Amazon, eBay, and eCommerce giants.