When a company is competing against so many giant e-retailers, it’s vital to be generating all of the revenue that you can get. Overstock.com is one of those retailers that is solely online and every sale counts. Recently, Internet Retailer took a look at Overstock and the numbers for the retailer in last year’s fourth quarter.
Overstock.com’s revenue last year equated to an increase of 10.7%. The figure came out to $1.66 billion, which is up from $1.50 billion in 2014. Yet, the e-retailer’s sales growth was slower during the fourth quarter, going up by only 2.1%. This is up only $480.3 million from $470.4 million the prior year.
Also, a key figure was that the company’s gross profit in the fourth quarter went down 2.7%, equating to $83.1 million, down from $85.4 million in 2014. Most retailers, whether online or brick-and-mortar, are expecting sales to pick up during the last quarter of the year, considering revenue that’s generated between Thanksgiving and Christmas.
The article discussed the reasons for the slow growth. A source for the low revenue could have been due to Overstock’s increasing popularity of its’ multi-tiered Club O loyalty program. It mentioned how in the e-retailer’s filing with the U.S. Securities and Exchange Commission, Overstock changed Club O into a two-tiered system, silver and gold, that allows shoppers to earn rewards instead of coupons, which may have hurt Overstock’s short-term sales. The shift could have caused some shoppers to not receive their immediate gratification that coupons provide.
Overstock.com commented on the impact of moving away from coupons to a rewards system, which is a change for shoppers. Overstock stated, “We believe that the shift from coupons to rewards will benefit us in the long term, but we have experienced some difficulties with the transition, and in the short term we believe it slowed our revenue growth as customers take time to become accustomed to this change. We are continuing to test and refine our approach in this transition.”
Also, another interesting stat was Overstock’s partner revenue. During last year’s fourth quarter, Overstock.com’s partner revenue increased to $446.7 million. This is a 4.4% jump from $427.8 million in 2014. Partner revenue involves Overstock orders that were fulfilled by other retailers that sell on its’ website. Physical stores is a prime source for e-retailers to get their online orders fulfilled. Beyond the actual order, a number of retailers are seeking to initiate Same-Day Delivery to get shoppers to get their online items even faster. Amazon, Google, Macy’s, and more have all brought a higher level of order fulfillment.
E-retailers like Overstock are implementing strategies to capitalize on online shopping. The industry is forecasted to reach to $500 billion by 2018, therefore, there is revenue ahead to gain for the retailer that can create the right mix of offers and services. AQuickDelivery is an Atlanta Courier that can help create the value-added services that shoppers are looking for that meet the growing convenience demand. Overstock has the rewards program to benefit the company long-term, yet the addition of same-day delivery can build online revenue as well. The Same-Day Courier supports multiple companies nationwide with order fulfillment and can do the same for Overstock.
Reference: 2.10.16, www.internetretailer.com, Matt Lindner, Overstock.com’s sales grow 2.1% in Q4, 10.7% for the year