Image Source: iStock | NoDerog
Why is Overstock.com Changing its Name to Bed Bath & Beyond?
Overstock.com is all-in on its Bed Bath & Beyond acquisition.
The online furniture and home furnishings retailer said it had completed its $21.5 million deal to acquire bankrupt Bed Bath & Beyond’s intellectual property and web domains. It also said it quickly planned to drop the Overstock name in Canada and the U.S. and rebrand its business under the Bed Bath & Beyond banner. Overstock has gone under its name going back to its founding in 1999.
“This acquisition is a significant and transformative step for us,” said Overstock CEO Jonathan Johnson in a press release. “Bed Bath & Beyond is an iconic consumer brand, well-known in the home retail marketplace. The combination of our winning asset-light business model and the high awareness and loyalty of the Bed Bath & Beyond brand will improve the customer experience and position the company for accelerated market share growth.”
Overstock, which last year completed a multiyear transition away from non-home categories to focus on furniture and furnishings for the home, uses a dropship network of about 2,600 suppliers to fulfill orders. It’s unclear how many of Bed Bath & Beyond’s previous vendors will come on board as Overstock changes names and adds bedding, bath and kitchen products to its mix.
The transition will happen quickly. Overstock plans to relaunch the Bed Bath & Beyond site in Canada within the week. It plans to follow that within weeks with a new site in the U.S., a new shopping app and loyalty program.
Overstock is rebranding its Club O loyalty program as Welcome Rewards, which will continue to offer five percent rewards that customers can redeem on all future purchases.
“Combining the strengths of the Overstock operational model and the Bed Bath & Beyond brand will create a powerful synergy,” Mr. Johnson said. “I’m excited for consumers to experience the new Bed Bath and an even bigger and better Beyond.”
Overstock is making this change at a challenging time for the company. It reported a 30 percent decline in net revenues in its 2022 fiscal year with a net loss of $35 million.
Mr. Johnson, in an interview earlier this year with RetailWire, said, “2022 was a really difficult time because so many in our industry had excess inventory and were in the process of liquidating it. That put real pressure on pricing downward.”
He also said pricing pressure would likely remain through the first half of 2023 as competitors work through their excess inventory.
The consumer pullback on discretionary purchases tied to persistent inflation has also worked against Overstock. The company posted a year-over-year sales decline of 29 percent in the first quarter with active customers on the site dropping 35 percent.
Mr. Johnson said there were positives to take from the results with revenue trending upward each month during the quarter. He also pointed to Overstock posting positive earnings before interest, taxes, depreciation and amortization in the quarter, the twelfth straight quarter it has done so.
Overstock’s preliminary forecast for the second quarter sees sales falling in the low 20 percent range.
Discussion Questions
DISCUSSION QUESTIONS: Are you surprised Overstock.com is ditching its name to become Bed Bath & Beyond? Do you agree that “combining the strengths of the Overstock operational model and the Bed Bath & Beyond brand will create a powerful synergy” and improve results?
Poll
Loading …BrainTrust
Mark Ryski
Founder, CEO & Author, HeadCount Corporation
Christine Russo
Principal, Retail Creative and Consulting Agency
Given Overstock.com’s performance, I’m not surprised that they want to take on the Bed, Bath & Beyond name. However, they still are Overstock.com and customers will learn that quickly. Overstock.com is taking a gamble that there’s enough love for the BBBY brand that consumers will respond. And that may happen for some. Ultimately, this company needs to offer great products and a great service for customers, or the name won’t matter.
Yes, very surprised. Both brand names are damaged or past their prime and so it was an opportunity to create a new clean slate.
Christine, exactly.
Completely agree.
Is it ok to say I have no idea why, or how this will play out?
Exactly my first response, why?
The founder of Overstock has gotten himself into some messes and damaged the brand. It’s not so much about the business per se…it’s about the things he has done.
Not that this is a great move, BTW.
This is a headscratcher. Renaming bad assets never results in a good ones. They’re missing an opportunity to start fresh with a new name in my opinion.
I’m not surprised. I’m shocked! Mr. Johnson vividly describes the problems and pressures of 2022 and it is difficult to see how a name change or rebranding solves or even remotely deals with those competitive and market problems. I came to value Overstock as a value-driven, treasure hunt experience. So to me, the rebranding narrows the scope of the brand promise, rather than expanding it. While in some cases that is a positive, Overstock could have refocused their business without a potentially confusing rebranding.
“Powerful synergy?” That statement baffles me.
Overstock is not a household name that is held in high favor and the BBBY brand reputation has slipped in recent years. Personally, I would have introduced an entirely new entity that didn’t come with instant baggage. But, I’ve been proven wrong often in my lifetime.
They want something harder to type?
Well Overstock probably has very high customer acquisition / SEO costs, and BBB had very high promotional costs (those famous 20% off coupons), so putting the two together sure sounds like a recipe for a lot of cost and not a lot of gross margin..
Just speculating here, but I think the 20 percent coupons are history with Overstock’s drop-ship business model and its five percent off future purchases offer. Maybe the new Bed Bath & Beyond will bring out a 20 percent off sale once or twice a year for its own version of Prime Day.
What’s the old saying? “You can’t make a silk purse out of a sow’s ear.” This could easily turn out to be the latest example of two troubled retailers folding their assets together to become one bigger, more troubled retailer.
That being said, I do believe there is more residual equity in the Bed Bath & Beyond brand than in the Overstock.com name. The lingering goodwill among BBBY customers — especially if the rebranded company can recapture its strengths — makes this an appropriate short-term move.
In many ways, this makes complete sense as the Overstock brand brings with it a great deal of baggage implying “couldn’t sell because it was bad.” On the other hand, nothing makes a transition like this a slam dunk. Brands are NOT owned by the company but are a shared agreement between company and people in the market. Change company does not mean that brand will continue to have meaning for people.
Thus, while it may end up being a useful move for Overstock, I doubt if it will create powerful synergy.
Operationally Bed, Bath & Beyond was struggling. They had a strong brand name but has had definitely withered in recent years. If Overstock can deliver on customer promises better than BBB could (extended range, reliable delivery) then maybe it can revamp the BBB brand and shed their own brand’s limitations . Overstock started as an online discount retailer, but has moved away from that pricing model. This could enable their transition in the consumer’s mind from ‘discount retailer’ to ‘full priced brand’. That said, a big part of the old the BBB brand was their 20% off coupons. The new loyalty program just didn’t have the same appeal. Overstock will need to work very hard to reap the benefits of this union.
To me the name Overstock.com has always sounded like a big mess of things other retailers couldn’t sell. I know I am off in my perception, but because of the name it never appealed to me.
Speaking as a consumer, Bed Bath and Beyond does. I know what to expect in that store and I shopped BBB because it had what I needed in one place, saving me from having to visit multiple retailers to find what I needed. And again, as a consumer, I don’t think I am alone.
I think consumers will respond positively to the name change. We – as in the media – have the inside scoop and opinions on what happened to Bed Bath and Beyond but the customer does not. They just like the store. I wish Overstock.com the best of luck. Now, let’s see what they do with BBB’s beloved coupon.
Will you be disappointed when you go to the new BBB and they don’t have what you need or expect?
I guess I’ll have to cross that bridge when I get there. I’m not thrilled with the Toys ‘R Us departments at Macy’s but I can still get what I need.
Surprised? It makes me think of the new brand manager who takes over a successful brand, and the first thing they do is want to change the graphics on the package.
Brands have meaning. Therefore, they may have value. While Overstock is having some rough times, its virtual business model is unique and has meaning for a shopper. I suggest they should be working on the efficiencies of the model, even if it means downsizing the company, instead of trying to convince shoppers that BBBY is something different than it used to be.
Overstock and Wayfair have gathered an impressive array of products at a reasonable price point, but haven’t been able to successfully compete against Home Goods and et.al. to the degree they had hoped. This move tells us a lot about how Overstock sees their offering and it’s not good. This has all the earmarks of a desperation play, to so abruptly reskin themselves with a company already viewed as past its relevance by a majority of consumers. Don’t get me wrong, I do think there was a lot of value left in Bed Bath & Beyond, but not as an online only discounter. That position pits them directly against Amazon, Alibaba and others who do this better and more profitably. If Overstock had included some of BBB’s real estate and rebranded as a completely new entity they could have leveraged the best of both companies.That would have given them the physical stores that Amazon and Wayfair lack, with the efficient eCommerce channel that Home Goods and TJX are missing. That would have given them a unique and potentially powerful value proposition and moved them quickly into a better business model.
Once again proving that after a certain point e-commerce retailers cannot grow without brick and mortar locations.
Yes indeed!
One can look at this from many perspectives. Since I am not a marketing specialist, I can opine only as a consumer. I never understand what there is to be gained by acquiring IP and name assets of a business that closed, period. Except if the acquirer is going to try to replicate all the good features and characteristics of its original namesake. Consumers do remember what BB&B and Toys R Us were and how they looked when we shopped them. If a new operator can simulate the business whose name it purchased, it may regain many of its former loyal customers. I wish the former Overstock.com good luck. Opening stores next?
This is yet another example of retailers looking for bandaid solutions to help them recover lost profits.
Buying into a brand name that had insistently failed their customers is a grasp at straws. I can understand why Overstock would buy BBB for their customer data and insights. But resurrecting a brand name synonymous for failure just seems like yet another retailer not understanding what the consumer wants.
The reason for the name change is simple: Bed Bath & Beyond is a much more powerful, much better known brand than Overstock. While Overstock has had some success, especially during the pandemic, it is one of those brands that has relatively weak awareness and suffers from being overlooked by people buying home stuff. In all of our research, it comes well down the batting order in terms of spontaneous awareness and is often seen as less appealing place to shop than other home retailers. For all of its issues, the same is not true of Bed Bath & Beyond. While it seems radical, Overstock is simply making the most commercially sensible move. However, while branding matters, it is the proposition and differentiation that will ultimately dictate success: Overstock needs to do more than just change the name, it needs to use this as an opportunity to redefine its business and to ensure that some of the negative baggage of Bed Bath & Beyond is dispensed with and it brings together the two businesses in a clear and compelling way.
Brands are a communication vehicle. They represent something in the consumers’ minds. Will those who bought things at Bed, Bath, and Beyond be disappointed when they go to the “new” one? What percent of the Overstock offering will match the shoppers’ expectations for products?
Similarly, if a shopper is looking for discovery and a bargain, will they even go to someplace called Bed, Bath, and Beyond?
Have always considered BBB as primarily physical location driven and Overstock as online only yet never a destination for purchase. Will be curious to see how this renaming will drive online traffic when that wasn’t the BBB brand identity.
So Overstock is trying to go from a treasure hunt brand to a home furnishing retailer by rebranding as BBBY ? Sounds like a great way to alienate existing customers.
Rebranding is never the answer for troubled businesses.
Well, yes, I am surprised. As Christine says, both brand names are damaged. I suppose the folks at Overstock decided BBBY was less damaged than Overstock (its founder got into quite a mess) and at least has some goodwill left.
Bed Bath and Beyond has 3-4x interest on Google Trends and is worth it on top of the SEO – $21 million for 11 million backlinks isn’t a terrible deal.
This was a big surprise to me. Not so much that they acquired them, but that they are rebranding Overstock to BBBY. These companies have two very different go to market strategies and both have a struggling track record. With millions spent in Overstock marketing campaigns recently, seems like a swift left turn leaving consumers confused and unsure about the brand’s future.
Ah yes the brand that once, very briefly – don’t ask why “briefly” – was known as O.co.
I’ll put it bluntly: this is the stupidest, least convincing argument to ever (dus)grace these e-pages. Lotsa luck, folks…you’re gonna need every bit of it.