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Overstock.com branching out

Just four years old, Overstock.com has gradually transitioned from selling closeouts and its namesake overstocks exclusively to retailing regularly programmed open stock. And now the young merchant is poised to expand its customer base with its first national marketing campaign.

"We started the business with closeouts, and now we've reached a volume where we can place very large orders with manufacturers," said Patrick Byrne, ceo and president. "We've discovered a great market and a great demand by customers."

Home textiles is an important part of the mix, contributing about 20 percent of total sales, which will hit $300 million this year, Byrne said. The category has approximately doubled each year, and the company is continuing its development efforts.

And previously, the company earned AmericasMart Atlanta's Rug Retailer of the Year award in 2001 when it entered and grew the category from zero to $6 million in sales over the course of three years.

While more than 60 percent of the mix remains closeouts and overstocks, the company found that the "inconsistencies limited us," said Byrne, so it turned to manufacturers to fill in the gaps. "It's important to have bedding in each size," for example. However, the company said that it has not considered changing its name at this point, since overstocks are still a vast majority of its merchandise.

"We're fanatics on customer service — that's how you get repeat business," Byrne said, echoing lessons prominently taught by merchants like Amazon.com or Lands' End.

But just in case that's not enough, Overstock.com has also launched a national ad campaign — dubbed "The Big O" — to familiarize consumers with its selections and values. The campaign includes radio and television spots, which open with a woman asking, "Have you discovered the secret of The Big O?"

The campaign began in August and will last at least through the end of the year. For its radio spots, Overstock.com went nationally with Clear Channel, ABC and CBS Talk Radio Network, as well as some local buying. For the television portion, it placed its ads with national cable networks, including Fox News, The Discovery Channel, Lifetime, Oxygen, The History Channel, CNN Headline News and CNN.

The current buy launched in August and runs through the end of the year, but the ad budget and specific buys — media, programming and day parts — are continually under review.

"This is a departure for us because, to date, we have eschewed branding, opting instead to spend 99 percent of our advertising dollars online in pay-for-performance deals, then count on our customers [two-thirds female] to spread the word," said Byrne. "We decided it was time to stake our claim as the premier e-tailer on the Web providing outlet store discounts on department store products. We chose 'The Big O' because it alludes to Overstock.com's vast selection, is easy to remember and seems to resonate with our audience."

The retailer also began offering bargains on hotel rooms, rental cars and airline tickets.

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