Overstock is now Bed Bath & Beyond: Suppliers started 'opening their catalogues' to us, says CEO
Overstock.com (OSTK) is now Bed Bath & Beyond, at least in the U.S. and Canada. Bed Bath & Beyond CEO Jonathan Johnson joined Yahoo Finance Live to discuss the relaunch of the brand. Overstock did a trial run of the rebranding in Canada first, of which Johnson said "we saw better direct traffic. We saw better conversion. All signs were good." Johnson said some suppliers reached out to the company after the name change and that, since the deal was first announced, they have added more than 600,000 new product SKUs in the bed, bath, and kitchen area, giving the customers a "deeper and broader offering."
When it comes to the impact on the business, Johnson says though there will be a big marketing push on the rebrand, long-term, he expects it to be "great for both the top and bottom line of our business." As far as changing the corporate name from Overstock to Bed Bath & Beyond, Johnson says it's "in the works" and that he would like to have it happen "sooner rather than later."
Finally, for those who are missing their Bed Bath & Beyond coupons, Johnson advises people to download their app, saying it will "feel very familiar" to customers.
Video Transcript
- Overstock.com looks a little different this morning. The company has officially rebranded itself to Bed Bath & Beyond at least in digital form. And after paying $21.5 million to acquire Bed Bath & Beyond, Overstock customers on its Canadian website were redirected beginning in early July. But today, that change expands to the United States. Bed Bath & Beyond CEO, Jonathan Johnson, joins us now in a first on Yahoo Finance here officially making the new regional change here in the US.
Take us into the strategy, the decision-making, the timeline that's going into this.
JONATHAN JOHNSON: So we've long liked the name, Bed Bath & Beyond. It was an iconic name that was synonymous with home. Overstock, as good as our business model has been, the name really didn't describe who we were. So the opportunity to purchase the name. We tested it in the rollout in Canada for a month. We saw better direct traffic, we saw better conversion. All signs were good. So today's the day in the US that we've relaunched as Bed Bath & Beyond.
- And so tell us about what you're seeing already in terms of people coming to the site. And I'm also curious, were people sort of waiting for it? It launched in Canada before. Were people coming to Overstock.com? Kind of, were you seeing an uptick in traffic ahead of the name change is what I'm asking.
JONATHAN JOHNSON: Not in the US. We did see a big uptick in traffic in Canada. The other thing that we saw was suppliers who we've long sought to do business with or to have them open their whole catalog to us started knocking on our door, opening their catalogs. So since the deal was first announced, we've added over 600,000 new product SKUs in the bed, bath, and kitchen area.
So it's a much deeper and broader offering than we had as Overstock. I think the customers are going to recognize that. It's really a great place to shop.
- Wait, that's really fascinating to me. So those bed-- I mean, obviously, those suppliers needed a marketplace for their stuff that went away when Bed Bath & Beyond closed its physical doors. Are they suppliers that you had tried to get access to before and now the name change has unlocked that?
JONATHAN JOHNSON: Absolutely. We always felt like we had a wonderful business model but a boat anchor of a name. Bed Bath & Beyond, great name, outdated, had become a boat anchor of a business model. We dropped the boat anchor from both, we put the two things together. And with both customers and suppliers, it seems to be pretty sleek sailing right now.
- Talk to us about that customer experience because a lot of people who had engaged with the previous brand or the previous iteration of Bed Bath & Beyond, they would say, all right, the digital is great but what about those physical coupons that I used to get? Those physical coupons, a lot more digital these days now with the transformation, how do you look at the promotional cycles, the customer engagement, where you're going to be able to leverage this name to drive more loyalty even?
JONATHAN JOHNSON: So we have always been a high level retailer or highly promotional using coupons. We'll continue to do that. For the Bed Bath & Beyond legacy customer that love the coupons, what they really need to do is download our new Bed Bath & Beyond app. That will be the way that special promotions will be pushed to them.
We have today, as people download that, a 25% coupon. That is a big, blue coupon that will be in their app. And so I think it will feel very familiar both as the products they see on our site and the shopping experience with great corporate deals.
Now, I will say this. I will say this, our pricing has always been a little sharper. So beyond this initial promotional period, we probably won't coupon quite as large. But the out-of-the-store checkout will be better deals. I think that's what they'll see because our pricing has been so sharp.
- I've been looking at this sort of tea leaves for the home furniture and decor industry. The last retail sales report we got, well, it was disappointing overall. Saw an uptick in furniture sales. There was just a report out earlier this week from Piper Sandler on one of your competitors, Wayfair, that talked about stabilization in home furniture. Talk to us about what you're seeing.
JONATHAN JOHNSON: So what we're seeing is a more normalizing of the seasonal cycle. So this summer, patio furniture has come back in seasonality like it didn't last year.
- Because people had already bought all their stuff during the pandemic.
JONATHAN JOHNSON: Because people had bought it during the pandemic, there was also a glut of inventory last year. So there's a normalizing of the seasonal nature. But the spend is still down a little bit. I don't think we're back to normal. As you were talking earlier in the show about people buying experiences and Taylor Swift and whatnot, that's still a thing, but the market is getting a little stronger in our space.
- What would you say of the quality of inventory that you're seeing that consumers are opting for? Is there a trade down even as they're coming back into that spending propensity in home furnishings?
JONATHAN JOHNSON: So we make sure we have a good, better, best offering so that people can buy the price point that they want. But we have seen over the last six months a slight trade down. If they were better purchases, they're a good purchase now. So that's happening.
When interest rates continue to go up, it makes home buying hard, it makes moving hard. All of that affects our industry as home products.
- When you look at the expansion of what kinds of products you guys are offering, I would imagine, and I don't know, but I would imagine something like furniture is a higher margin business than some of these more home goods items you're talking about. So what should investors expect from the picture of your profitability going forward?
JONATHAN JOHNSON: Yeah, so we mentioned on our earnings call last week that we do expect our average order value to go down a little bit because you're right, buying a patio furniture set is different than buying a sheet set. And so we expect AOV to go down a little. But we also expect order frequency to increase. And so while we will initially have a big push and spend more on marketing than we have in the past as we rebrand, and that will affect profitability for a time, in the long-term, we think this is actually going to be great for both the top and bottom line of our business.
- I want to focus on that word, beyond, as well here because I mean, that really opens up different verticals that you could potentially tap into and how you brand the corporate culture of the company, how the external culture and how the company is perceived is also taken on. So where do you kind of intend to lean further into the name that has already been recognized and that appears like in the stock and investing community versus the customer community in different verticals that you launch?
JONATHAN JOHNSON: So for now, we're really focused on being a home furnishings and home decor retailer. We're a Bed Bath and a much bigger and better beyond because our product offering is there. But where it goes into the future in different verticals still be determined. We're really focused on this rebrand and making sure that the home customer knows that the new Bed Bath & Beyond is a great place to shop.
- For now, it's still Overstock as the parent company and the ticker is still OSTK. Any timeline for when that might change?
JONATHAN JOHNSON: Julia, we get asked that a lot. It's something that's in the works. I'd like to have it changed sooner than later because I don't like the confusion around the two. We were really focused on getting the rebrand and the website up running as quickly as we could. That's our next step. And I'll have to come back and talk again when we do that.
