The Overstock Company (Overstock.com) is a retail site catering to the online market, with physical headquarters located in Cottonwood Heights, Utah. The company as we know it has been in business since 1999, although it first saw the light of day as the D2: Discounts Direct Company. That company was well on its way to becoming the premier online provider of surplus merchandise when it was purchased by Patrick M. Byrne in 1999. It was Byrne who renamed D2: Discounts Direct the Overstock Company, and they now offers new items in addition to the surplus merchandise that the company was initially known for.
The Overstock Company initially sourced out surplus merchandise from 18 dot-com companies, and began selling these at greatly discounted prices–well below wholesale prices in fact. It was only fairly recently when the Overstock Company began supplementing surplus its line up of surplus merchandise with brand new items. Returned items also account for a large percentage of the Overstock Company’s sales.
The Overstock went public in early 2002, with an initial IPO price of $13. During an early boom in the company’s operations, this figure reached as high as $77. A string of later losses caused the figure to plummet into the single digits however. The Overstock Company basically competes for the same market as Amazon.com and eBay.
The Overstock Company Business Model
A large portion of the website’s merchandise is made available solely to the Overstock Company by several suppliers. Many of these items are sourced out from other countries, where they are manufactured by hand. In addition, the Overstock Company also manages inventory supply for a host of other online retailers.
In 2004, another trophy was added to the Overstock Company’s roster of already excellent services, with an online auction feature making its appearance on the company’s website. A much welcome addition to the already stellar services offered by the Overstock Company, this auction site placed the company in direct competition with hordes of other auction sites on the Internet. With this development, the Overstock Company has made yet another significant step into tapping into the vast online shopping market.
In the early years, a lot of the Overstock Company’s market was drawn from impressions of existing customers. Although fairly impressive for its word-of-mouth nature, the company sought an even bigger market with the launch of a string of television advertisements. The most famous of these starred Sabine Ehrenfeld, with later ones featuring Briana Walker.
The Overstock Company And The Naked Short Selling Campaign
In recent years, the founder of the Overstock Company Patrick M. Byrne has achieved increasing prominence in the media, thanks to his campaign against naked short selling of shares of his company. Naked selling involves selling a stock short without going through the standard practice of borrowing or locating shares first. Byrne felt that such actions goes against the tenets of conventional shorting, and can actually cause the downfall of a company, due to widespread devaluation of that company’s shares. The campaign has generated a lot of controversy, with the industry divided with regard to its legitimacy.