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Fri July 15 2011 18:02:55

Overstock Abandons Third-Party Seller Marketplace

By: Ina Steiner

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As most retailers and marketers are opening their doors to small third-party sellers, Overstock.com is closing its door to them. It told sellers on Friday it would close the O.co Marketplace on July 21, 2011 (see details in today's EcommerceBytes Newsflash).

Overstock.com rolled out its auction site in the fall of 2004 under the direction of Holly MacDonald-Korth. It cost $6 million to develop, and pitched its auction feedback system as one that used social networking to protect its community of buyers and sellers.

Shortly after Overstock.com launched auctions in 2004, Patrick Bryne told shareholders:

First there was "e-bay" and now there is "o-cean" - the internal code name for Overstock.com Auctions. I think this will work for three reasons: 1) certain dynamics within eBay's marketplace are causing eBay's Powersellers to itch for an alternative; 2) our auction tab scratches that itch; and 3) the social networking imbedded within our auction tab may turn out to be powerful.

Overstock.com moved aggressively to compete with eBay when it launched, a time when eBay was a virtual monopoly and sellers were eager for competition. Overstock.com shadowed eBay's seller conferences, launching extravagant off-site parties to lure attendees.

But Overstock.com ran into problems in 2005 - founder Patrick Byrne explained it had invested heavily in infrastructure - and the auctions business took a back seat.

In 2006, Byrne told sellers that the auctions business was viewed as a "money-losing distraction" by Wall Street, shareholders and others in the company who wanted to close it. That year, its auction platform processed an estimated $40 million in GMV (gross merchandise volume).

Today's closure of the Overstock.com Marketplace goes against the current trend by other retailers and marketplaces who are opening 3P marketplaces - Buy.com, Sears, Walmart, NewEgg, for example.

I spoke to Overstock.com spokesperson Roger Johnson this afternoon - he said they preferred not to comment for the record. Let us know what you think - why was Overstock unable to be a serious contender to eBay in 2004 - 2005? And, is the closure of Overstock Marketplace a significant event in 2011?




Comments (34) | Permalink

Readers Comments

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

This user has validated their user name. by: Anonymous Annie

Fri Jul 15 18:08:32 2011

I'm sorry for the folks at Overstock who will have their business disrupted and who must make other arrangements.

The silver lining is that the pool of "alt" sites is  now less dilluted... and when one goes down, their clients will gravitate to the remaining alt sites. Eventually one (or more) will start to pull ahead of the pack, and a clear winner will emerge.

Which one will it be?

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: Pricetack PB
Web Site

Fri Jul 15 18:53:23 2011

Overstock never really seemed that committed to third party sales. It shows how difficult it is to get in to auctions even for a bigger company with existing traffic and decent resources. However I'm not sure how much we can really learn from it given how erratic Overstock and its management are.

I missed that NewEgg, Sears and WalMart had gotten in to 3P. I wonder how those efforts are going? It looks like they are catering to somewhat larger merchant partners. Walmart appears to only work with around 6.

Plug: we're building a unique 3P offering around automatic markdowns. Check it out: http://pricetack.com

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: Joe Average

Sat Jul 16 00:34:34 2011

I must be out of the loop. Of course I heard about overstock.com, just never realized that they hosted auctions. Lacking promotion perhaps?

I think that the trouble in the current online world is that everyone gravitates toward the dominant player. ie Facebook and not Friendster or Myspace.

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

This user has validated their user name. by: Bill

Sat Jul 16 01:21:23 2011

Overstock deals in ordinary and everyday type of merchandise which is not meant for the auction crowd. Only one of a kind type items (all collectibles) are suited for auctions. The O is for just what it says overstock which sells at a discount from retail and people flock to it for that purpose.

eBay, as it was originally meant to be, was for auctions of collectible materials. They are gravitating from that and it is the main reason why eBay is falling off.

Amazon was for media and they built on that with Kindle and the likes. That is why they are rising above every one since no matter what they throw in there it does not deviate from the original program that much and just strengthens their hold on the over all market and get the good prices.

eBay has blown the whole concept out of whack. The collectible aspect is being pushed to the side and they have become a big discounter of primarily junk that everybody and their brother has for sale. It has become a glorified Maxwell Street in Chicago.

Donut hole knows exactly what that is since he came from here and those out there that do not know. think of a huge flea market selling nothing but fake knock off products (i.e. a fake Rolex for $25.00) and cheap taccos made out of horse meat.

Bill

The only constant in life is change.

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: 273943

Sat Jul 16 02:05:30 2011

I just went to the overstock site. First thing I saw was a great big paypal banner. It must be a scammy site.  Guess I won't be shopping there.

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: WAYNE SEDAWIE
Web Site

Sat Jul 16 02:33:09 2011

I operate several specialized auction sites and sales have been growing at 40% per annum.we have sold $8 million online.
But in last few months we are flooded with over 100 applications each week to be a seller on our sites so we have had to close our applications till November.
I do pity the sellers who work to help these companies grow and than get  thrown out if profits are small.
Im not impressed how these large companies treat entrepreneurial sellers from Ebay ,paypal etc
family run business are getting squeezed out and GREED is still the motive for these savvy online companies.
Family business need your support from my sites and to all fellow businessman who are not conglomerates!
Wayne Sedawie
CEO
www.opalauctions.com.
www.gemrockauctions.com

www.jewelry-auctioned.com
www.coins-auctioned.com

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: RJ

Sat Jul 16 07:00:11 2011

When the big O hit the auction scene I thought OH!! BOY!! I sell unique and away I went. 3 hours later I realized because their system was designed by someone who was clueless it was never going to work just another throwing money at a dead horse site. Only took me 3 hours to figure out and it took them 7 years..

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: Digby
Web Site

Sat Jul 16 17:21:40 2011

Well they hardly ever get mentioned on these blogs and letters.

Its always ebid.net, or bonanza, or ecrater, or etsy, or artfire, or rubythisorthat, etc.

It seems there are some specialised sites building up.

Eg Delcampe for stamps.



Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: MR ME

Sat Jul 16 17:44:55 2011

I didnt even know that overstock had an auction site ... what kind of promotion did they do. if any.?
and as for their "Coliseum" .. it is still refered to as Oracle arena or Oakland coliseum, so what good?

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: happyharry

Sat Jul 16 21:37:40 2011

I sold on overstock for 3yrs and completed over 2500 transactions. That site is hard to get started on, but if you proved yourself you did well. I was happy with them. I will be sorry to see them go!

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: anyone out there

Sun Jul 17 08:24:44 2011

Seems like overstock auctions had the same problem all these other wanta be sites have.

NO ADVERTISING. They expect everyone else to do it for them HENCE no sales.

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: Keith
Web Site

Sun Jul 17 09:50:09 2011

Yea, ''O'' had taken off years ago but then pulled the plug on most of it by dramatically increasing fees. Truth be told, they were never much of a threat to the Bay. Glad we didn't bother to go back last year when they kept sending us invites.

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: Rhonda

Sun Jul 17 18:46:04 2011

Why would Overstock Auctions advertise? Sellers invited people to their auctions and a lot ended up buying from retail instead of at auctions. Happened to me more than once.

Management was more interesting in creating clubs and titles than dealing with knock-off items and rip-off sellers.

Overstock Auctions seemed to have promise because they were so well branded; unfortunately, the auction division was so poorly managed only a relative few of the hundreds of thousands of sellers they initially attracted had a good run with the site.

I, too, wonder what too so long to shut 'er down?!

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: Ron

Sun Jul 17 20:01:15 2011

I think that the problem lies with a misunderstanding of what should be auctioned and what shouldn't.

Take a clue from real life auction houses.  The auction houses do not auction off newer, easy to acquire, short product life commodities.  They auction off hard to acquire and hard to price vintage, antique and collectible items.  Period.

The problem is that these corporate types have no understanding or appreciation for items with aesthetic or artistic value.  They simply see auctions as another way to sell stuff without differentiating between what is appropriate to sell that way and what is not.

This accounts for the mess that eBay is in now.  Everything got jumbled up, subject to the same search and restrictive rules.  When an auction house sells something, you don't get to take it home, live with it for two weeks, use it, and then decide to return it.  

eBay's management has instituted universal rules that just don't make sense for auctioned items.

And sites like Overstock, again, don't target a user segment, but simply mix everything up so that the site has absolutely no identity.

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

This user has validated their user name. by: Ming the Merciless

Sun Jul 17 21:37:21 2011

Ron, you've brought an excellent point.

Ebay began with a lie (the Pez lie vs. the laser pointer truth), and Meg Whitman expanded and ingrained dishonesty and disception as a business model into the ebay corporate culture.

The Ho has taken this business model to a whole new level of evil.

Combine this with hiring far too many sociopathic, predatory MBAs of the Bain ilk (the Romney connection) while refusing to hire experts in auctions, its approval of knockoffs, and constant fee increases, etc. were in hindsight the recipe for ebay's decline as market force and continued slide into marketplace irrelevance.

FWIW, for my money, Patrick Byrne always seemed unstable and more than a little flakey.

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: Patricia This user has validated their user name.

Sun Jul 17 21:52:09 2011

Of all the sites that have popped up over the years Overstock has the greatest chance to grow.  They stifled that growth all on their own for some unknown reason.  Service on auctions got worse and worse...I listed there when there was only 5 other paintings or less in the whole art category.  Last month I totally gave up....last 5 sales there ALL had deadbeat bidders!  So, I stopped before Overstock did.  They, themselves never let auctions get off the ground then killed them altogether! Good riddance to them!

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: Patricia This user has validated their user name.

Sun Jul 17 22:13:44 2011

I have to add that most people never knew about Overstock auctions because they were not advertised.  Something I will never understand because they used to advertise their retail site more than even Ebay did - but NEVER said a word about auctions.  At one point I even thought maybe they're afraid of repercussions from ebay?  Who know - I just know they could have been successful with just a little work...

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

This user has validated their user name. by: Philip Cohen
Web Site

Sun Jul 17 23:40:01 2011

WhHo knows, maybe they were all ex Bain & Co MBAs running the show. If so, what else then would you expect from such turkeys?

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

by: Left Behind

Mon Jul 18 00:35:36 2011

I really believe there is some sort of inside story to why Overstock never promoted auctions. It's the same way eBay put someone on the board at the BBB in CA. This is how Bain, MBAs and the Corp world work. The little people get milked for every penny and get run over. Power and greed are first and foremost. For all we know eBay may own a percentage of Overstock. Anyway I think Philip is on to something.

Overstock Abandons Third-Party Seller Marketplace   Overstock Abandons Third-Party Seller Marketplace

This user has validated their user name. by: Philip Cohen

Mon Jul 18 02:45:34 2011

The Better Business Bureau has never ever been anything but a front for big business to divert the attention of unhappy consumers. How else could a representative of the likes of eBay be appointed to its board?

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