Cover Story: A Calming Presence
An e-commerce lifer — granted, that’s less than 20 years — Stormy Simon can’t imagine doing anything else for a career. As president of Overstock.com, the Salt Lake City-based online retailer of home goods, furniture, women’s and men’s apparel, jewelry, electronics and a host of other products, Simon relishes the opportunity to come to work each day in such a dynamic, fast-paced industry. From temp worker to leading a company of 1,500 employees, it’s been quite a 14-year journey for Simon at Overstock.
When she started at Overstock in 2001, two years after the company was founded, Simon had zero experience in the retail industry. She was hired to work in the sales department, and was tasked with learning an industry in its infancy. Simon was in the right place. Overstock, along with Amazon.com and eBay, were the pioneers of e-commerce. A level trust of trust that’s been built with consumers over the years — along with a lot of hard work — have been key to Overstock’s success, says Simon.
“When Overstock started in 1999, we were developing a new behavior for consumers,” Simon recalls. “Traditionally, consumers bought everything by walking into a store. I think our success comes from timing. It was the right time to introduce shopping online, shopping home goods online. People hadn’t done it before [shopped online], so we really had to be dedicated to seeing it through.”
That success continues on today. In its most recent earnings call in August, Overstock reported its 14th consecutive profitable quarter, along with 17 percent revenue growth.
Loyalty Driving Growth
The loyalty of Overstock’s customers is what Simon points to as essential for the retailer’s future growth. To help it retain customers for the long term, Overstock offers an aggressive loyalty program, Club O, that rewards members with cash back on their purchases, exclusive offers and free shipping (exclusive to Club O Gold members). And the program is easy to join. Club O Gold is $20 annually, while all that’s required of shoppers to become a member of Overstock’s recently launched Club O Silver program is for them to give their email address to the retailer. In addition, Club O membership is free to military, teachers, students and all first responders.
“It’s all about Club O; it’s just the richest rewards program online,” says Simon. “I’m a consumer at heart, so I can’t be passionate just because I’m an e-tailer. I love shopping and finding good deals, and Overstock really does give people that. And Club O pays me to shop, and I love it.”
With the success of Amazon Prime and the recent launch of Wal-Mart’s ShippingPass (unlimited free shipping for a $50 flat fee), customer retention through subscription loyalty programs appears to be a growing trend in the retail industry. Overstock has taken notice, and responded with improvements to its Club O program.
“Everyone is trying to figure out how to keep their customers more loyal,” says Simon. “You have to be dedicated to retention.”
Amazon a Competitor?
As a pure-play online retailer, it’s just assumed that Amazon.com would be considered competition for Overstock. And it is — just maybe not to the extent that you would expect it to be. Due to the diversity of Amazon’s business — e.g., its fulfillment business, web services, streaming entertainment options — Overstock doesn’t view it as a true competitor.
“Amazon isn’t our competitor,” Simon states. “It’s into so many categories, and it’s hard to compete in areas that we’re not currently in. How we do compete with Amazon is that we sell products online, and we have a curated product assortment from curated partners.”
Furthermore, Overstock is now competing with traditional brick-and-mortar retailers — e.g., Wal-Mart, Target, Macy’s, etc. — that have moved online as well. With the marketplace growing by the day, Overstock is looking to differentiate its business through high-quality products that provide value to its customers.
“Everybody is competing right now — you’re competing for that wallet share,” says Simon. “The problem is you can’t address every competitor. You can’t have a strategy for how to take on Target, how to take on Wal-Mart, how to take on Kohl’s. For us, we have to be true to our brand, our value proposition, and our customers and what they expect from us, while keeping our eyes wide open.”
In an effort to differentiate itself from the competition, Overstock is investing in technology and trying to give its customers the best shopping experience possible every time they engage the brand. Mobile is central to this mission. Overstock’s award-winning app and mobile site, for example, are used primarily as a research tool by its customers, who ultimately make their purchases on the desktop site. That trend has influenced Overstock to do things such as produce more high-quality content for its customers to consume.
“Content is king,” declares Simon, “and we’ve worked really hard towards providing more content about our products. Consumers can be anywhere at any time now with their phone, so we’re constantly evaluating ways to make a bigger impact in mobile. Consumers want to be able to research their purchases — that’s our content — but you also have to make it so it’s easy to buy, and that’s our app.”
Product Expansion in the Works
In addition to doing a better job of retaining its existing customers, Overstock wants to add new customers as well. Introducing new product categories is one way it’s going about doing that. However, Simon and her team are extremely cautious about adding the right products and working with the right manufacturers. Overstock doesn’t want to become the all-everything store. Value and quality is the foundation on which the company wishes to build on.
“We have these great partnerships that started 15 years ago, and I do think we can broaden our assortment,” says Simon. “The manufacturers that we’ve created partnerships with have been known to deliver amazing product. They take pride in what they’re making, and we know at the end of the day that there’s going to be a happy customer. We don’t want to do business with people that sell junk. There’s never a good end to that story when you’re an e-commerce company.”
To help with the increase in traffic that will come with a bigger product assortment, Overstock has invested time and resources into developing a proprietary commerce platform.
For Stormy Simon and Overstock.com, the past 14 years have been all about establishing themselves as leaders in the e-commerce arena. The next 15 years and beyond will be about growing the brand through a commitment to its customers, its products and vendor partners, and technology.