Forced into a price war, Overstock digests third-party sellers' inventory in exchange for growth

It is learned that according to foreign media reports, Overstock, an American home furnishings shopping website, is purchasing inventory from third-party suppliers to attract more brands and retailers to join. The inventory crisis in 2022 triggered a discount frenzy, forcing Overstock to be involved in a price war.

For Overstock, overstocking is not a problem for the platform itself because the platform does not have many products of its own. Most of them are from third-party suppliers. As of now, the number of third-party suppliers on the Overstock platform has reached 2,600.

The key issue is that the inventory crisis in the overall market triggered a wave of price cuts, causing Overstock to lose its price advantage and its revenue fell by 30% in 2022.

While Overstock itself doesn’t have an excess inventory problem, excess inventory at its suppliers has a significant impact on the retailer’s business. Banks and other financial players play a role in the industry’s inventory and sales dynamics, and the end result is that suppliers in the home furnishings industry are still slower to clear out old inventory than they and retailers would like.

Overstock CEO Johnson believes that the company's advantage lies in its strong cash flow, which helps it pay with a faster payment cycle (15 to 30 days) than other retailers in the industry, which helps third-party suppliers turn their inventory into cash.

Overstock expects the current industry inventory glut to last until at least the first half of 2023. As Overstock eyes future growth and tries to win over new vendors and brands to sell on its site, the company is buying up inventory from its vendors.

According to Johnson, Overstock is buying inventory from suppliers that have not received payment or have canceled their contracts with Bed Bath & Beyond, thereby attracting some of the merchants that previously operated in Bed Bath & Beyond.

Overstock has been trying to win over new brands or convince others to increase their product and sales depth with the retailer. If these brands are connected to Overstock's direct sales system, they can sell more and faster after the platform clears out its purchased inventory, thus alleviating the inventory crisis to a certain extent and preventing the price war from escalating.

Editor✎ Ashley/

Disclaimer: This article is copyrighted and may not be reproduced without permission.