This is a partial transcript from Your World with Neil Cavuto, December 11, 2001.
BRENDA BUTTNER, HOST: Who says retailers are in a slump this holiday season? Not our next guest. A slowing economy actually has business booming for this guy. Joining us now to explain why is Patrick Byrne, CEO of Overstock.com.
Thanks so much for joining us.
PATRICK BYRNE, CEO, OVERSTOCK.COM: Thanks for having me.
BUTTNER: So, basically, the fundamentals of your business are, you go to expired dot-coms, or you go to people who have more inventory than they can sell...
BYRNE: Sure. What gets us all the ink is the fact that we've liquidated a bunch of dead dot-coms. But that's only 10 percent of our business. Ninety percent is getting excess inventory from manufacturers and other people who have it.
BUTTNER: And then you sell it to us extra special cheap?
BYRNE: Cheap as heck. Sixty percent off retail is our average price.
BUTTNER: That's pretty good. I want to actually show a couple of full screens at what kind of prices you have. A Fuji digital camera, I think you can over $200, is the bottom line. And how do you do this? How do you make money doing this?
BYRNE: That's the colonel's secret recipe. We can't tell you that. But we do get fantastic deals. And as cheesy-CEO as it sounds, we get these fantastic deals on the by-side, and then we pass it on to the consumer. So we have gotten a couple truckloads of Fuji cameras at a huge discount, the wholesale, so we sell it to the consumer below wholesale. We have stores coming in and buying at the price that we sell them.
BUTTNER: Now, all this is new? It's got warranties?
BYRNE: It's all new, factory warranty.
BUTTNER: Not defective, not of that?
BYRNE: No, we don't do defectives.
BUTTNER: I have to say, I was very skeptical when I first started doing research on your company. But, business is booming for you guys.
BYRNE: We've grown from $3,000 a month two years ago, to 10 or $11 million this month. We're profitable.
BUTTNER: Your real, honest-to-goodness profit, not pro forma?
BYRNE: None of that stuff.
BYRNE: One thing, is we do very little marketing. Our customers are 75 percent female. And we rely on word of mouth. We do hardly any marketing. We're about 1/5 of the traffic of Amazon, yet we spend maybe 1/100th of what they spend on marketing. It's just because we give these outrageous deals. And our customers, mostly women, tell other people about it.
BUTTNER: But are you getting the stuff that just isn't moving because it's not hot this season?
BYRNE: There's a different story for every product. It could be somebody went out of business, it could be a manufacturer had an order that someone accepted 80 percent of it but they canceled the last 20 percent, and he has to dump it. A lot of manufacturers at the end of the season don't want — you know, they move warehouses or they're closing a warehouse, and they just want stuff off their shelves. So we get these fantastic deals.
BUTTNER: Is some of this, like, last year's color or last year's style?
BYRNE: Usually not. We have Gucci purses, new Rolex watches. We get new stuff every day, about 100-150 new products a day. It's hard to believe. It sounds corny.
BUTTNER: I still don't know how you make money. That's where I'm trying to figure it out . Is it just on volume?
BYRNE: We buy so well that we can give a great discount to the consumer and still make a penny.
BUTTNER: OK. You're heading into your busiest and most important week, because people have to order on-line to get by Christmas, by standard shipping.
BYRNE: Right, but we have — we control our own fulfillment out of Salt Lake City. And we ship on average — we have a great fulfillment record, as rated by independent groups like BizRate. So if people order even up through Monday, Tuesday, Wednesday next week, they'll get their products.
BUTTNER: Are you public?
BYRNE: I own it.
BUTTNER: When are you going public?
BYRNE: Don't want to.
BUTTNER: No? You don't want those pesky shareholders.
BYRNE: Why share a good thing with the public?
BUTTNER: All right, thank you so much for joining us.
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