November 13, 2003, 12:00 AM

An expanded assortment sparks a major site search upgrade

A move into books, videos and music last year added 350,000 SKUs that slowed Overstock.com’s search. But the retailer didn’t mind upgrading the function: the category is now 10% to 15% of sales.

Kurt Peters

Executive Editor

It’s axiomatic that hard work earns you more hard work. Overstock.com has worked hard to expand its product categories and its assortment within them, but the expansion overtaxed its existing search function. That spurred a major site search upgrade using EasyAsk Inc. technology at the online liquidation site this year. “The one we had was built on algorithms that were developed when we had just a couple of hundred lamps and tables. They didn’t work as well given that we now have between 10,000 and 20,000 products,” says CEO Patrick Byrne.

Even more than that product expansion, the need to beef up site search turned on Overstock’s addition of a book, music, video/DVD and video game category a year ago. In addition to its other products, Overstock now carries more than 350,000 titles in that category, which in one year has come to represent 10% to 15% of overall sales, Byrne says. The category offering launched with far fewer products than it has now, representing a learning curve for Overstock. “We found you have to get a certain critical mass of about 100,000 to 120,000 titles before people start thinking of you first,” says Byrne.

More people are doing that, since Overstock makes a point of pricing books, which represent about 200,000 of the titles in the combined category, at 23% below the same books as offered on Amazon.com; 25% below Amazon on best-sellers. Currently, Byrne adds, Overstock.com is selling about 300,000 units from the combined category to consumers each month and another 300,000 b2b to small book and music store retailers.

That’s progress for a category only a year old on the site, but it sets the online retailer up for more hard work ahead, given what Byrne has in mind. “I figure Amazon sells 9 to 10 million units per month in North America,” he says. “If you count our monthly consumer and b2b sales, we’ve captured about 6% of the market from Amazon in a year. I’d like to see that grow to 12% by the end of next year’s second quarter.”

 

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