Web-only retailer Overstock.com Inc. says Q2 net revenue reached $794.5 million, up 4% from $767.0 million a year earlier. Gross profit reached $174.8 million, or 22% of net revenue, down from $177.9 million in Q2 of 2020.
While some retailers’ revenue figures are declining after a boom in online sales during the pandemic last year, Overstock increased its revenue by focusing on its home goods market, CEO Jonathan Johnson said in an interview with Digital Commerce 360.
“We’re really leaning into home,” Johnson says. “We do that in part because one, we’re really good at it. We’ve figured out how to deliver and make it a good customer experience. And two, people who buy home products from us are twice as likely to make a repeat purchase.”
About 94% of Overstock.com’s revenue comes from home goods, which the company classifies as home furnishings and furniture. According to Johnson, that’s the highest percentage in the company’s history.
The remaining 6% represent non-home products, which Johnson says Overstock plans to stop selling in the next year.
Online sales grew rapidly last year for many home goods retailers as consumers began shopping more on the web to spruce up their living spaces during the height of the pandemic. For example, housewares and home furnishing retailers ranked in the 2021 Digital Commerce 360 Top 1000 grew online sales over 30% in 2020 compared with total sales growth (online and offline) at roughly 18%, according to Digital Commerce 360 estimates. This is compared with roughly 22% online sales growth for the home category in 2019 and about 10% growth for total sales.
However, as consumers begin to venture outside again—and as the pandemic lifts—sales growth at retailers like Overstock and its competitor Wayfair Inc. is slowing. Overstock’s net revenue had previously grown 108.7% in Q2 2020 from 2019, over 100 percentage points more than Q2 2021’s growth. However, Overstock still managed to grow its revenue in a quarter where other home goods retailers are beginning to decline.
For instance, Wayfair’s net revenue fell 10.4% for its three months ended June 30 compared with the same quarter in 2020. By comparison, net revenue increased 83.7% year over year in Q2 2020 to $4.30 billion from $2.34 billion in Q2 2019. Additionally, net income fell to $130.43 million in Q2 2021, a 52.38% decrease from $273.88 million a year earlier.
Despite decreases for some companies, Overstock.com CEO Johnson is still optimistic about the home goods market, especially for his company.
“At the beginning of 2020, before the pandemic really kicked in, 23% of home goods were purchased online, the remainder being brick-and-mortar,” Johnson says. “During the pandemic that got up to 42%. Today, it rests in the mid-30s, and we think much of the migration to online will stick.”
Johnson says that more of the population permanently working from home will continue to drive home furnishing sales. He says some of these workers are moving from smaller living spaces—such as apartments in New York, Chicago and Los Angeles—to larger homes in Florida, Texas, Idaho and Utah.
“That means people have new homes to furnish, and often bigger homes to furnish,” he says. “We think the housing sector is going to continue to be strong, which means the home furnishings sector will be strong.”
Johnson says Overstock is currently focusing on two initiatives right now: improving its site search and expanding into Canada.
Overstock recently launched a Canada-specific URL that’s in beta testing, and the company is in the process of transitioning to ship products from Canadian warehouses.
In addition to its retail segment, Overstock.com Inc. has also been heavily focused on blockchain technology. The company closed a deal in Q2 2021 to work with a venture capital firm to take over managing the blockchain companies it has invested in, Johnson says.
“It means that we can be entirely focused on running our online home furnishings company,” he says.
In Q2 2021 for the three months ended June 30, Overstock reported:
- Net revenue of $794.5 million, a 3.6% increase from $767.0 million in its Q2 2020.
- Net income of $309.8 million, an 801.0% increase from $34.4 million a year earlier.
For the six months ended June 30, Overstock.com reported:
- Net revenue of $1.45 billion, a 31.4% increase from $1.11 billion in 2020.
- Net income of $325.7 million, a 2098.1% increase from $14.8 million.
Percentage changes may not align exactly with dollar figures due to rounding.
Overstock.com is No. 31 in Digital commerce 360’s 2021 Top 1000.