In the next 17 months, it expects 10% of its B2B customers will be transacting on the web, an executive says.
While sales are rising fast, Overstock.com’s management is reining in spending, the company says. Lower customer acquisition costs and reduced sales and marketing spending narrow the quarter’s loss from operations to less than $1 million.
Gross merchandise sales for the second quarter were up 102% to $26.1 million from $12.9 million in the year-ago quarter and up 22% from the first quarter of this year, Overstock.com Inc. reports. Loss from operations, excluding amortization of stock-based compensation, for the second quarter was $959,000, compared with $3.9 million a year ago.
CEO Patrick Byrne attributes the increase in gross merchandise sales to improved product selection and growing interest among smaller retailers without the volume buying power of big-box chain store retailers in sourcing goods from Overstock’s B2B operation, OverstockB2B.com. Byrne attributes Overstock.com’s decline in operating losses from a year ago to “operating discipline,” marked by metrics such as a reduction in sales and marketing expenses to 9% of sales from 23% a year ago, and the reduction in the average cost of customer acquisition to $9.68 for the quarter from $25.15 a year ago.
“I’m satisfied with this quarter’s results, but see opportunities to improve," Byrne says. Overstock raised $39 million in an initial public offering in May, saying it would use the funds for expansion and debt reduction. Byrne says Overstock.com’s third quarter focus will be on larger marketing deals to increase distribution, such as the recently announced agreement under which Overstock powers a shopping site on iVillage.