What’s in a Name? Overstock CEO’s $21.5M Bet on the Power of an Iconic Brand to Grow Sales

In March 2023, Arthur Stark, the former president of Bed Bath & Beyond (BBBY), discussed the company’s revival of its coupon strategy called the “big blue” approach. The tactic involved sending 20% discount coupons to millions of households and was an iconic part of the Bed Bath & Beyond brand.

But even that wasn’t enough to save the storied retailer from collapsing after it shifted its strategy to favor private label brands to recover the foot traffic it lost during the pandemic. Its short-term success wasn’t enough to save BBBY from filing for bankruptcy in April 2023.

In its quest for a life raft and potential bidder, the competition felt far from fierce.

“We were surprised there weren’t more bidders,” said Jonathan Johnson, the CEO of Overstock, in an interview with Karen Webster on the heels of its Q2 2023 earnings call in which investors responded favorably to early signs that the company’s plan to acquire the BBBY name and 20 million customer list for $21.5M in June and rebrand as Bed Bath & Beyond is yielding promising results.

“We saw real value in the brand and the customer list,” said Johnson. “It’s an iconic brand that we wanted to save. It’s a customer list that matches well with ours — not a lot of overlap, but the demographic is someone that’s with us.”

Although Overstock recognized that the Bed Bath and Beyond business model was outdated, the company saw the potential to spend very little to essentially shed the “anchor” of the Overstock brand name and diversify its product lines to include the bedroom, kitchen and bath items that people buy much more frequently than patio furniture or a new living room sofa.

Customer research and polls found that although customers were disheartened by the shift in-store product and merchandising strategy, the brand itself was still well-liked and positive.

“We’ve taken a name that’s beloved and a business model that wasn’t working to bring Bed Bath and Beyond to the 21st century where brick and mortar is tougher, online is better and mobile is a way that people want to shop,” said Johnson.

He added that if it’s name brands that customers want, it is name brands that customers will get.

Changing Consumer Perception

Post-acquisition, Overstock, now BBBY, has relaunched its website in Canada and will soon follow with a website, mobile app and loyalty program in the U.S.

Johnson told Webster the newly rebranded retailer has already observed significant growth in categories such as bedding, kitchen and bathroom, primarily attributed to its Canadian launch and plans to prioritize these categories on their website and in improved search engine marketing optimization strategies. An early proof of concept shows the power of the brand name as it was found that consumers searching for particular products on platforms like Google are more inclined to discover Bed Bath & Beyond as a compelling choice, leading to increased conversion rates.

Read also: Overstock.com Rebrands Following Bed Bath and Beyond Purchase

Under BBBY’s new ownership, Johnson said that registries will remain an integral part of the business, tapping the expertise of former Bed Bath executives to refine and enhance its registry strategy.

“We’re self-aware enough to know that no one wants to put registered@overstock.com on their wedding announcement. But people happily and proudly put registered@bedbathandbeyond.com on a wedding or a birth announcement,” said Johnson.

Johnson noted that promotions will continue to be a part of their sales strategy alongside the smart value pricing strategy, a long-standing cornerstone of the Overstock brand.

“The feeling of getting a deal will be there and there’s going to be better pricing — so, the coupon [discounts] won’t have to be as big, Johnson said, adding that the retailer will use the mobile app to promote those special deals more frequently.

So, too will a new, ‘elevated’ digital experience that Johnson described as “Bigger, Better, Beyond,” using digital capabilities to elevate the customer experience and enrich the retail and merchandising journey for the BBBY customers.

“We spent a lot of time making products findable, making the product description’s accurate and the reviews accurate,” Johnson said. The new BBBY is also focused on optimizing additional components, including navigation and internal site search, to improve product discovery and encourage better, more informed purchasing decisions.

Converting a Brick-and-Mortar Following

The Bed Bath and Beyond customer base, which included a significant brick-and-mortar following, is something of a challenge for Overstock, particularly since the physical retail footprint and inventory was not part of the acquisition. Approximately 25% to 30% of the BBBY sales were done online, with the rest done in the stores.

However, among the 20 million active customers, Johnson emphasized that half were already shopping in an omnichannel manner, combining both online and in-store purchases — a behavior that emerged during the pandemic, when people became increasingly comfortable buying home furnishings and furniture online, particularly when it came to items like patio furniture and sofas.

Johnson also discussed Overstock’s approach to competing with major players like Amazon — which claims 68% of the online home furnishings market, and Walmart in the eCommerce landscape. He emphasized the importance of not trying to outcompete them directly.

“You don’t out Amazon. And you don’t out Walmart. I mean, the general merchandisers that live at the everyday low prices, we don’t play their game,” said Johnson. With that, Johnson acknowledges that larger general merchandisers with an everyday low-price model had a significant advantage in their ability to cross-subsidize and undercut competitors.

Instead of directly challenging these giants, Overstock made a strategic decision to concentrate on its expertise in the home furnishings domain. Johnson believes the company can excel in providing vision, offering better style options and curating a good, better, best pricing approach to cater to customers’ diverse preferences and budgets. The approach has been well received by suppliers as well. During the company’s earnings call, Johnson emphasized the addition of 600,000 new SKUs from suppliers eager to re-engage with the new Bed Bath and Beyond shopper.

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