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E-Commerce, Retail

Overstock CEO: More Photos, Videos, Metaverse-Like AR Needed to Cut Furniture Returns

Overstock CEO Jonathan Johnson reviews the online retailer's strategy, how it is working to reduce costly returns, and investing in next-level augmented reality tech.

3/1/2022
image of overstock logo on top of company's website
Overstock, which now focuses exclusively on home products, continually works to reduce costly returns.

MIDVALE, Utah -- At a time when rising freight and handling costs are complicating already lean inventory levels and compressed delivery times, retailers have never been more interested, or incentivized, to reduce product returns — especially when they’re big and bulky items like furniture. So reports PYMNTS.com, a research, data analysis firm that focuses on new technology and payment platform, in an exclusive new review with Overstock CEO Jonathan Johnson.

Indeed, as much as manufacturers have gotten better at making “knock-down” or “flat pack” furniture more easily shippable, Overstock CEO Jonathan Johnson told PYMNTS it’s still  difficult for customers to get unwanted stuff back in the box, PYMNTS.com writes in a new executive insights report, published in full below (click here to see PYMNTS.com article).

The best solution to the costly returns problem, he said, is to avoid them in the first place.

“We do a lot on our site to have more pictures, more videos,” Johnson said, noting the 22-year-old online retailer’s policy to not curate customer reviews as another way of keeping stuff from coming back.

“If people get bad reviews, we want customers to see that. If they say, ‘This is more navy than it is blue,’ we want people to see that. It’s just important for people to know what they’re buying,” he added.

Even so, Johnson concedes, it is also important to make the return process easier, both in terms of self-processing, repackaging and labeling.
Still, he firmly believes that stopping returns early before they start is the best way to go.

Johnson said that Overstock is also currently working on a project to increase the use and quality of technology to elevate the shopping experience and improve upon what he considers crude and imprecise early versions of augmented reality (AR).

"The next step is going to be some kind of metaverse type of shopping. It’s going to go beyond augmented reality, and it’s going to be able to create your room on the site or something like that,” he said.

So-So on Social

At a time when many retailers, including Walmart, have made a major push to reach young consumers via selling on social media sites such as TikTok or Instagram, the 20-year Overstock veteran and former General Counsel turned CEO said it’s an area the company needs to work on.

“We’re doing [social commerce] but we’re probably not as good as the game yet,” he said. While the process of identifying and aligning with good influencers is still an emerging art that poses its own set of challenges for retailers, it is — and will be — the way to connect with the consumers of tomorrow, especially as they age and start to furnish whole homes rather than single rooms.

“Our demographic is probably a little older than that today, but it’s a demographic we’re working to reach out to,” Johnson said, while noting the above-average conversion rate that Overstock sees on its app.

“If someone takes the time to download our app they like us,” he said, pointing to the unique promotional and couponing opportunities that apps carry. “An app is the new email. It used to be that we got an email address and we were really stoked,” he said.

While an in-app experience and better conversion rate are notable, Johnson said, compared to the main website they are still “relatively small” but projected to deliver continued user growth over time.

As far as plans to add physical stores to its portfolio the way most of its online competitors are, the Overstock chief said that is not something that is currently being considered.

“As far as having a brick-and-mortar, omnichannel is the way to go ultimately, but we’re not ready to get there because we like our asset-light business model,” he said. “Omnichannel is probably helpful in terms of returns but I’m  glad I’m not paying landlords at the mall right now,” he said.

Focus on the Home

For a digitally native retail business with roots dating back to 1999, Overstock is still looking to innovate and reinvent itself within its core digital home furnishing category.

“When you look at folks in the U.S. that sell online furnishing, Amazon is the biggest, Wayfair is second. Walmart's third, and Overstock is fourth,” he said. “We passed Target two years ago. We’re ahead of West Elm and Ikea and Restoration Hardware,” he added, noting that the Utah-based company has morphed from its initial namesake role as a liquidator, to a general retailer, to a site that is now focused solely on in-home and outdoor furnishing.

“We’ve probably got two more quarters before we’re out of any of the last remnants of the non-home products we sell,” he said. “We’re really focused on the home now so that’s kind of been our journey,” he added, noting its status as a major distribution channel for furniture manufacturers given that over 90% of its orders are currently drop shipped.

As for Overstock’s long-standing free shipping policy, Johnson said that is also not going to change, calling it an important feature in a streamlined customer journey without any unwanted surprises late in the process.

“You don’t want to lose people at the end of your purchase funnel because, when they say, ‘Oh wait a second, I thought I was getting a deal on this and now it’s going to cost 150 bucks to ship?’” he said. “That just doesn’t work.”

To be sure, Overstock has faced its share of volatility over the past two decades, with its stock falling about 40% over the past 18 months following a momentary spike higher amid the pandemic lockdown home-nesting craze.

While analysts focus on the next quarter’s sales and earnings results, Johnson is taking a slightly longer term view of things.

“We don’t think growth and profitability are mutually exclusive … We think we can take market share and make money,” Johnson said. “It’s been two and a half years since I took over as the CEO and after delivering seven consecutive quarters of profitability and growing market share each of the last two years, the message [the growth and profitability can co-exist] is beginning to soak in but it will take time.”

PYMNTS.com is a wholly owned subsidiary of What’s Next Media & Analytics, with  offices in Boston, Chicago and Buenos Aires.
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