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Does the ‘New’ Bed Bath & Beyond Have the Right Formula for Success?

Update 10/27/23 — Overstock has filed paperwork with the United States Securities and Exchange Commission (SEC) to officially change its corporate name from Overstock Inc., to Beyond, Inc. Additionally, the company provided written notice to the Nasdaq Stock Market to voluntarily withdraw the principal listing of the company’s common stock and transfer the listing to the New York Stock Exchange. The company expects that listing and trading on the Nasdaq will end on Nov. 3, 2023, and trading on the NYSE will commence on Nov. 6, 2023. The company’s official stock ticker symbol will be “BYON.” This article initially ran on Oct. 17, 2023.

In its original incarnation, Bed Bath & Beyond (BB&B) was defined by its in-store experience: exploring exactly what was included in the “beyond” category, checking out the gizmos and gadgets near the cash wrap and then redeeming those ubiquitous 20% off coupons at checkout. In contrast, Overstock.com, which purchased BB&B’s intellectual property following the chain’s bankruptcy earlier in 2023, is an ecommerce pure-play with long-ago roots as a liquidator. Its current business model is based on owning very little inventory and relying on its suppliers to drop-ship orders to customers.

Despite the two retailers’ dramatic differences, BB&B CEO Jonathan Johnson firmly believes that Bed Bath & Beyond’s reputation with both suppliers and consumers, combined with Overstock’s “asset-light” operating model, will be the right combination for the reborn brand. What the model won’t include are a marketplace or brick-and-mortar stores, at least for the foreseeable future.

Retail TouchPoints (RTP): What was the thinking behind renaming Overstock.com as Bed Bath & Beyond so quickly after buying the retailer’s IP? (The renamed website debuted in the U.S. on Aug. 1, 2023, following the June 29 launch of the Canadian version.)

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Jonathan Johnson: Overstock had this great business model, but it was weighed down by its name, even though we haven’t been a liquidator for two decades. It’s been hard to convince both customers and suppliers that we’re no longer a liquidator. Bed Bath & Beyond has a great customer base and a great name, but had a business model that pulled it down over time. We saw an opportunity to take the things that are good and drop those that aren’t so good, and we wanted to rebrand to accurately describe who we are.

As to why we acted quickly, that did create some wrinkles, but a brand that’s unused, and a customer base that’s un-talked-to, are wasted assets. We wanted to talk to customers as quickly as possible.

RTP: We’ve seen other retailers, such as The Container Store, move into some of BB&B’s traditional product areas. How will you be competing with these new entrants into the space?

Johnson: This is a big total addressable market, and we were aware of that even as the legacy BB&B was in the throes of filing for bankruptcy. In fact, Overstock spent the better part of the back half of 2022 building up our housewares and appliances offerings. As to how we’ll compete, we’ll continue to provide great prices and convenience, and we’re improving our internal search to make products more easily findable, as well as enhancing the images and videos we use. These are all the things Overstock has done so well with in recent years. We think there’s a market there and that we can expand it.

Additionally, Overstock had carried bed, bath and kitchen products, similar to the legacy BB&B, and the new BB&B will sell all those things — we’ve been signing up more and more suppliers. Legacy Overstock also sold outdoor and indoor furniture as well as area rugs — essentially it was a much bigger and better “beyond.” We want those legacy BB&B customers to feel at home ordering from the new BB&B. Maybe someone comes to the site to buy linens or cookware and we get them to buy patio furniture; we know it works in reverse [based on customer activity at Overstock]. What excites me so much about the new brand is that it gives us the opportunity to earn our customers.

RTP: What do you see for the future of the new BB&B?

Johnson: Today we own almost no inventory; it’s a drop-ship business, but it’s not a marketplace where anyone can come and list products on our site. We don’t ever want it to be a marketplace where everything is cheap and it’s hard to find things.

I see us continuing to be asset-light, and we have no intention of opening brick-and-mortar stores. They say “never say never,” but I’d say it’s “never” — for now.

RTP: Where do you expect BB&B to be in a year’s time?

Johnson: I think we’re going to have significantly more products on our site; we added 1.3 million products since the [acquisition] was first announced, and that will continue to grow, particularly as we look for good-better-best product offerings in each category. Since this rebrand, suppliers that wouldn’t do business with us as Overstock are now doing business with BB&B, and they’re offering the entirety, or most, of their catalog.

I know that during this coming year, our average order value (AOV) will come down, because bed and bath products are [at lower price points] than outdoor furniture, so I hope both AOV and purchase frequency will be growing in one year’s time.

RTP: For you personally, are there people who have had a big impact on your career and how you operate?

Johnson: When I was a brand-new lawyer, my first assignment that I was negotiating on my own — without a client or senior attorney overseeing me — was for a licensing deal with a Japanese toymaker. I talked to the client first and identified the 10 key points [they were concerned with]. I negotiated the deal and thought I had won on all 10 points, and I went back to the client, who said “This isn’t a good deal. We’ll make a lot of money for a year because we won on those points, but the other side won’t make any money. You need to go back and negotiate a deal where both sides make money.”

That was an early eye-opening experience for a young attorney who thought all the time about winning, and it’s permeated our business model for both Overstock and BB&B. It has to be a three-legged stool: if the suppliers aren’t making money and the customers aren’t getting a good deal, it just won’t work.

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