Overstock: Fixing Supply Chain’s Weakest Link

If there was ever a time to have a tight handle on the supply chain, this is it. Just ask the people at Overstock.com.

As many companies struggle with ensuring a clean line of products now and after the current coronavirus health crisis subsides, Overstock has balanced Chinese and other international partners to keep its inventory of home and office furniture in stock now and for the short-term future, said Ron Hilton, chief sourcing and operations officer, in an interview with Karen Webster.

Much of that planning and commitment to customer-centric excellence comes from Hilton, who joined the company back in 2008 from the brick-and-mortar side of the family furniture business to the eCommerce startup that was to become one of the strongest pure plays in the business.

At that point in his career, the main issue was the most serious financial bind the world had seen since the Great Depression. The struggle then was in convincing consumers to buy furniture online in a climate of fear.

Now, the main issue is the most serious health crisis the world has seen in modern times. The fear is different but just as intense. Hilton’s issue has been not convincing people to buy online, but to make sure that the disruption in their Chinese supply chain, which supplies 50 percent of Overstock’s inventory, doesn’t choke Overstock at a time when there’s no margin for error.

“We saw things shifting on the production side around the Lunar New Year,” he said. “The consumer shift really didn’t happen until, I would say two and a half, three weeks ago. And that shift has really happened pretty quick. But when we started seeing the manufacturing shift and we had about 50 percent of our goods come through products that are sourced in China, we immediately reached out to our other primary partners. We call them all of our vendors partners because they ultimately own the product, and they ship it directly to the consumer.”

That kind of agility does not come at the price of quality. Hilton said all of Overstock’s manufacturing and retail supply partners are selected according to strict standards and are in place to help Overstock react to manufacturing shifts, such as this emergency, as well as consumer shifts. For example, home gym equipment is trending on Overstock since the crisis broke. That supply chain agility, Hilton said, provides a competitive advantage and presents an opportunity in a crisis.

“We have over 4,000 partners that we work with from over 6,000 warehouses throughout the country,” he said. “We’re able to [provide] a unique nimbleness that most brick-and-mortar stores cannot match. We can definitely shift to where the customer needs us and fill in where [there] might be supply chain issues or inventory issues. But yes, we feel that we have a unique opportunity there.”

The coronavirus crisis has provided both headwinds and tailwinds for Overstock. Like most companies, it is dealing with a remote work situation, which it planned for two weeks before the crisis hit. On the other hand, office and home furniture has taken a back seat for the time being to hand sanitizer and more health-related items. But on the plus side, Overstock is able to pivot — as referenced earlier — to different product categories due to its supply chain.

“We have the capabilities and the tools to shift, whether it’s in the building or outside of the building,” he said. “And we’re maintaining those same deliverables to ensure that we don’t skip a beat. And the nice thing is, we’re not necessarily chasing bright, shiny objects left and right. We may have some things that change from a product mix perspective. There might be some elements where marketing says, ‘Hey, listen, we need to actually make sure that we’re putting [an] easy path to the customer to get to these categories that they’re interested in.’ That’s great. Those are things that [are] just business as usual, and we’ll always make those types of shifts whether there’s a situation like this or just natural, seasonal shifts that we see.”

And the company, and Hilton, have kept their eyes on the asset that is most important: the customer.

“I mean, ultimately, if we’re here to serve them, and if we’re able to transition from selling outdoor furniture one week and then have a massive shift and start selling a ton of freezers and toilet paper and essentials, then that’s what we need to do,” he said. “But more so than ever, it’s important that we focus on what the customer’s looking for.”