How Overstock Rebranded to Bed Bath & Beyond

By:

Andrew Richard

November 28, 2024

•

5 min read

Overstock launched in the late 90’s. But fast forward to 2023, and Overstock has now fully rebranded after acquiring the IP and digital assets of another retail giant – Bed Bath & Beyond.

You may ask yourself, "Well, how did we get here?” Pull up a chair and strap yourself in as we give you the backstory behind one of the more incredible (genius? sloppy? opportunistic?) re-brands in recent memory - and one that most people don’t even know about.

One company’s failure is another’s success

Overstock started as a different company – D2: Discounts Direct. The original company started in 1997 with Robert Brazell at the helm, and only survived for 2 years before getting pushed out. In ‘99, Patrick Byrne came along and was like, “Hey, I’m gonna buy this thing and turn it into something”. After buying the assets of D2, Byrne changed the name to overstock.com – a pretty sick domain IMO.

Byrne grew up throwing caution into the wind, constantly testing out different entrepreneurial ventures in his teens. Eventually, he cut his teeth on Wall Street and got exposed to investing. But, it wasn’t until he started working with the GOAT of value investing, Warren Buffet, where he really learned about making money at scale.

When Byrne launched Overstock, the company only really made money by selling surplus and returned merchandise through its e-commerce site. In the early 2000’s, e-comm was all the rage, and Overstock made its name as the “go-to” place for deeply discounted goods that were “overstock” from other retailers. In 2002, Overstock IPO’d with Byrne leading the charge.

Although it took about a decade for Overstock to generate a profit, the company finally achieved a profit of $7.7M in 2009. A year later, Overstock reported gross revenue over $1B, showing how much scale was required to make a modest profit while operating on razor thin margins. But, where others saw risk, Byrne saw opportunity.

What works in one country, might not work in another

In 2011, Byrne was ready to take another major gamble for Overstock. He wanted to create an easy shortcut and memorable brand for people to recognize and discover Overstock, so he decided to rebrand the company to O.co. The goal of the rebrand was to unify Overstock’s international operations. O.co moved quickly and even managed to secure the naming rights to the Oakland Coliseum to generate more top-of-funnel awareness for Overstock’s new brand.

Although short and catchy (who doesn’t like a domain name that rhymes), customers were confused as the .co TLD wasn’t widely recognized at the time. Soon after, the company scaled back their efforts and returned to Overstock.com as the primary web address).

Byrne’s Bitcoin Bet

On January 9, 2014, Overstock became the first major retailer to start accepting Bitcoin as payment for its goods. In the first 22 hours, Overstock made more than $126k in sweet, sweet crypto from 800+ orders. It seemed like incremental revenue from the $3M per day that they were generating, but it was an avenue for Byrne to diversify the company’s exposure with a new digital asset. Byrne even spun out a subsidiary, Medici Ventures, to focus on blockchain and crypto. But it proved to be ahead of its time, as Medici never really produced the financial results that Byrne had hoped.

Through its tenured history, Overstock struggled with being profitable consistently. Despite being one of the OG’s of e-comm, Overstock was fighting head-to-head with other value retailers, like Amazon and Walmart.

Spies, Lies & Security Ties

In 2019, Byrne, resigned abruptly after revealing that he dated a Russian spy and was involved in a “deep state” investigation of the 2016 election. The romance began in 2015 when Byrne started a relationship with Maria Butina, a Russian gun rights activist who was later found to be an unregistered foreign agent acting on behalf of the Russian government. Soon after, he and another executive were named in an investor’s lawsuit, accusing Overstock of securities fraud.

All of the additional attention and scrutiny made Overstock’s stock volatile with fluctuating financial results, leadership changes, and strategic company shifts. So, in 2023, Overstock needed a Hail Mary to take another swing at the e-commerce game. And, this is exactly where the Bed Bath & Beyond calling card came into play. Around the time that Overstock was having turmoil, BBB was going through their own difficulties with declining financial performance and leadership changes.

From Billions to Broke

The TL;DR of Bed Bath & Beyond (BBB) is that it was a much bigger retailer than Overstock, generating $12B+ in revenue at its peak. BBB made most of its revenue through brick and mortar retail but was also where they realized most of their burn as retail became more competitive with online players.

Eventually, in April 2023, BBB threw in the soft, absorbent, Turkish cotton towel and filed for Chapter 11 bankruptcy, signaling a struggle to stay solvent amidst increasing competition and operational challenges. The business was sold to Overstock at auction for pennies on the dollar – $21.5M to be exact – which was a fraction of the gross revenue that BBB generated at its peak.

At the time of the acquisition, Overstock’s market cap was approximately $870M, so taking a risk to acquire Bed Bath & Beyond’s assets wasn’t necessarily a reckless spin of the roulette wheel.

But, why would Overstock – a fully digital company – want to acquire the assets of a brick & mortar retailer with a ton of liabilities and infrastructure? Well, in 2023, Overstock had a bit of a haggard reputation – they were known for selling cheap, left-over goods and had challenges establishing trust with their customer base. So the decision to absorb and re-brand into a company that already had a strong reputation made sense.

Bed Bath & Beyond – Once a Retail Sweetheart

At its peak, BBB operated ~1,500 stores across North America and BBB had a strong business – with a particularly strong brand. They were trusted, had a reputation of carrying high quality products (especially private label ones), and had a strong assortment of SKUs. People who liked BBB… really f’ing loved BBB.

Despite Bed Bath & Beyond generating the majority of their sales through brick and mortar retail, they had a strong digital presence, as well. In 2020, they reported that 38% of their sales were through e-commerce. When BBB filed Chapter 11, they also reported having a roster of 20M active customers, which was estimated to be 4x the size of Overstock’s customer base. Overstock also had an older customer base, while BBB’s was much younger and highly active on mobile.

So, when finalizing the acquisition offer on BBB’s assets, Overstock agreed to acquire the digital side of BBB’s business without any covenants to take-on the liabilities of the brick and mortar baggage that BBB had to dump.

Through the acquisition, Overstock hoped that it could funnel BBB’s customers into its ecosystem, and generate procurement and operational synergies between the two behemoths.

But, rather than just merge the two companies, Overstock took a much bigger swing. Amidst the operational and leadership turmoil, paired with its dwindling brand reputation, Overstock’s team decided to rebrand entirely.

Overstock shifted the company to trade under the banner BYON, and started positioning itself as the parent company “Beyond” – beyond.com.

As of June 2024, Beyond has a singular focus to connect consumers with products and services that unlock their homes’ potential. The company’s goal is to offer millions of products to people at various life stages. Beyond is the brand banner for five retail companies, with more on the horizon to come under the Beyond name.

Eventually, Beyond wants to become the “stack” for people’s lives through its brand Beyond+ with products and services available for home supplies, furnishings, improvements, financing and insurance.

The Final Saga in Overstock’s Rebranding Efforts?

Beyond is reporting that they are still “getting things off the ground” and it’s understandable given how much integration is required as part of an acquisition. Traffic has increased, but the non-sequestered jury is still out on the long term business impact of the transaction.

So, in the end… was it all worth it for Overstock? Hard to say.

Objectively, BBB had way more traffic and loyal customers than Overstock at the time of the acquisition, so it was a pretty savvy buy IMO. Why spend huge sums of money and dedicate significant time to re-build your reputation if you can just buy a new one? A new brand doesn’t fix the fact that profit margins in retail are incredibly tight. Let’s just assume there won’t be any more of those 20% off coupons coming in the mail moving forward. 😀