The opening of a new distribution center is part of a broader rethinking of Overstock's ways of operating, says one of the retailer's longtime executives.

Overstock.com Inc. is opening up a new a distribution center in Kansas City, Kansas, with plans to begin shipping from the facility next month. The location is strategic as it will allow Overstock to offer two-day ground shipping to more than 99% of customers in the contiguous United States, says Jonathan Johnson III, a member of the retailer’s board of directors and its former president.

Overstock will stock the 517,000-square-foot warehouse with top-selling products. At first, the facility will only handle outgoing orders, but in time it will expand its functionality to include returns processing. The distribution center’s opening coincides with the retailer’s annual anniversary sale, which features discounts and special perks for members of Overstock’s Club O Loyalty Program, including 10% rewards on select products.

The opening of a new distribution center is part of a broader rethinking of Overstock’s ways of operating, which includes its longstanding reluctance to add many new distribution centers and affiliates out of fear that those operations would constitute nexus, or a physical presence, in a state that would require it to collect sales tax on sales in that state, Johnson says.

But Johnson says everything has changed in the wake of the U.S. Supreme Court’s decision in Wayfair v. South Dakota, which allows states to require out-of-state merchants to collect and remit local sales tax on goods sold to their residents. Three days after the decision, the retailer began voluntarily collecting sales tax in all 45 states that have a sales tax. It also began reestablishing some of the affiliate relationships that it had terminated in 2009 after California, North Carolina, Hawaii and Rhode Island sought to collect sales tax when an affiliate link directly drove an Overstock sale.

“We feel like we’ve taken the shackles off our marketing and operations teams,” he says. “Now that [the Wayfair decision] is the law of the land we’re free to play within the confines of the situation.”

advertisement

In the first few months after it began collecting sales tax, Overstock has seen minimal, if any, impact on sales. Even so, Johnson believes Overstock was right to spend years fighting against an online sales tax.

“It was the right thing to do from a business perspective,” he says. “And, frankly, had [the previous precedent, Quill Corp. v. North Dakota] been overturned 15 years ago, it would have had a negative impact. But in the years since the battle began, people are increasingly going online to shop out of convenience rather than price.”

Overstock is No. 32 in the Internet Retailer 2018 Top 1000.

Favorite