Small Link Draws Big Response for Test of Overstock BTB Site

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Overstock.com, a business-to-consumer online-only closeout retailer, is set to officially launch its first business-to-business site Monday at Overstockb2b.com.


The launch follows a three-week test of the site, during which only a small tab on Overstock.com promoted it. The link drew an unexpected 900 clicks per day.


Since the inception of overstockb2b.com, the site has seen 75,000 visitors, company officials said. The company uses a proprietary in-house site-tracking system.


Last fall, Overstock began tracking visitors and their purchases. The company discovered that a small segment of consumers were purchasing large lots of the same items, sometimes spending thousands of dollars on a single purchase, which suggested they might be business buyers, said Patrick Byrne, CEO of Overstock, Salt Lake City.


"We were able to determine that 5 [percent] to 10 percent of our sales were coming from small retailers," he said. "We had people coming online buying $30,000 worth of jewelry a month and took a lot of pains to disguise themselves from us. We are already set up to handle selling to consumers. We can handle fulfillment and realized we're in a perfect position to serve the small independent retailing audience."


Testing of the new site has resulted in 3,000 small retail businesses registered, and an average of 50 businesses are placing orders per day. The three-week test also revealed that the average business order is about $250. The business demographics are 50 percent gift shops, 10 [percent] to 20 percent electronics and small general stores, and the rest are professionals buying office equipment or furniture.


"What we did was put the words "business purchase" inconspicuously on the overstock.com site, and people began clicking on it," Byrne said. "When we turned it live [three weeks] ago, we did $20,000 our first week, $30,000 our second and as of [last] Monday we did $20,000 in sales for that day."


Kevin Lane, Overstock's executive vice president, admits the company did find a small glitch during the test. Some visitors abandoned the registration section, saying it was too long. The company fixed the problem by shortening the section.


Overstock buys large quantities of merchandise to resell to small retailers for 30 [percent] to 35 percent off what many would pay a wholesaler. The problem this segment faces is that many are unable to buy large quantities of wholesale items and are unable to compete with larger discount chains that offer lower prices, Byrne said.


The company is building its house file and has already secured 130,000 small businesses. It also has secured 65,000 names of people who sell at flea markets and soon will begin campaigns to target both segments.


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