That includes 10,000 seasonal workers for its distribution centers and 3,000 to help stores cater to cross-channel shoppers.
Overstock's revenue increased by 22% and profit shot up more than seven times over Q2 2012.
Consumers are spending more on Overstock.com, driving higher revenue and profits for Overstock.com Inc. But that doesn’t mean the web-only retailer has abandoned its roots in selling excess goods at highly discounted prices, says chairman and CEO Patrick Byrne.
“We’re an extreme discounter,” Byrne told analysts today. In fact, he said, on average prices on Overstock.com are 9% lower than on Amazon.com when the two e-commerce sites sell the same product.
Amazon.com Inc., No. 1 in the 2013 Top 500 Guide, did not immediately respond to a request for comment. Overstock is No. 31 in the Top 500.
Byrne made the comments today in response to an analyst who asked whether the steady increase in average order value on Overstock.com means the e-retailer is raising prices.
Overstock’s CEO agreed average ticket was up 21% in the second quarter, to $167 from $138 in the year-ago quarter. But, he said, it’s not because Overstock is raising prices. He says Overstock constantly compares its prices to 10 competitors, and plans to increase that to 60, checking prices on half a million products every day. “Our prices are the lowest,” he said. “We pretty much don’t want a product on the site that’s not the best price or tied for the best price.”
A shift to selling more products in the home and garden category—that’s more than 60% of sales, Byrne said—and higher-end jewelry, account for part of the higher average ticket, he said. In addition, he said, Overstock is spending more to attract more attractive customers. Overstock’s cost for acquiring a new customer increased 28% to $26.10 in the second quarter from $20.38 a year earlier.
“There are customers we do not want,” Byrne said. Asked to give an example, he cited a hypothetical jewelry store that buys 100 items and then returns 40 that haven’t sold.
Overstock plans to aggressively seek new customers in the current quarter, as consumers who buy for the first time in the third quarter often come back again during the holiday season, Byrne said. He also said Overstock has begun offering its products on online marketplaces operated by others, although he did not name them. Co-president David Nielsen told analysts that Overstock is buying up “major closeouts” so that it can offer big deals in the fourth quarter. “It’s going to be exciting,” he said.
Byrne also highlighted Overstock’s success in attracting consumers to shop on smartphones and tablets. He says mobile devices account for 35% of traffic to Overstock.com and 18-19% of sales. “We didn’t think people would shop on mobile, or we thought they would shop but not buy,” Byrne said. “That turns out not to be true.” But he said consumers who buy on smartphones have a lower average order value than Overstock.com customers as a whole, while tablet shoppers generate a higher ticket on average. He speculated that may be because tablets remain relatively expensive devices, mainly owned by more affluent consumers, and speculated the difference in spending behavior will change as tablet prices fall in the future.
For the second quarter, Overstock reported:
- Net revenue of $293.2 million, a 22.4% increase from $239.5 million in the same quarter a year ago;
- 87.6% of revenue came from sales by other companies selling through Overstock.com, up slightly from 85.8% last year; direct sales by Overstock accounted for 12.4% of Q2 2013 sales;
- Net income of $3.7 million, up 687% from $470,000;
- Gross margin of 19.7%, versus 18.0%;
- Sales and marketing expense of $19.2 million, an increase of 42.2% from $13.5 million;
- Spending on technology of $17.9 million, up 18.5% from $15.1 million;
- General and administrative expenses of $16.59 million, an increase of 14.3% from $14.52 million.
- 1.533 million unique customers in the quarter, 4.3% more than 1.470 million a year earlier.
- 1.953 million orders, up 4.2% more than Q2 2012.
- Gross profit per transaction of $29.62 versus $23.04 a year earlier, an increase of 28.6%.
- Employee headcount increased 10.6% to 782 employees from 707 a year earlier. Overstock says most of the additional employees are in technology and marketing.
Shares in the web-only discount retailer rose 22% today after the company released its earnings report.
For the first two quarters of 2013, Overstock reported:
- Net revenue of $605.2 million, a 20.6% increase from $501.9 million in the first half of 2012;
- Net income of $11.40 million, up 257% from $3.19 million;
- Sales and marketing expenses of $37.91 million, a 35.5% increase from $27.99 million;
- Technology expenses of $36.08 compared to $30.76 million, a 17.3% increase;
- General and administrative expenses of $31.673 million, up 8.0% from $29.338 million.