Overstock.com Customer Story

A completely overhauled returns process keeps thousands of happy customers coming back for more.

Overstock.com pioneered selling surplus goods online and became one of the largest U.S. retailers. They sell things like furniture, rugs, bedding, electronics and jewelry from their Salt Lake City base and through thousands of vendor partners who drop-ship goods directly to consumers. With sales booming, warehouse space dwindling and speed-to-market expectations elevated by competitors, the company’s culture of customer care faced growing challenges. Chief among them was the daunting task of managing returns costs and logistics. That’s when Overstock.com turned to us for insight on outsourcing.

"We built Overstock on a foundation of customer service, and we were looking for a partner to build on that value."

Debi Brown, Vice President of Supply Chain, Overstock.com

The Challenge

Growing sales were already stressing the existing warehouse space in Utah. And managing hundreds of thousands of annual returns was becoming increasingly complex and costly, especially to provide good customer service for east coast customers.

The Solution

For years, we had handled shipping for Overstock, including a returns solution that let customers print their own returns shipping labels. As sales—and returns—grew, we proposed a returns outsourcing solution. Overstock was already studying how to proactively optimize their network, so the idea was timely. Collaboratively poring over maps and data, Overstock and UPS logistics planners chose Hebron, KY, a time-tested UPS logistics hub. Hebron serves 78% of the east coast and 66% of the nation with two-day delivery. Hebron also provided seasoned manpower, with employees moving returns from dock-to-stock in 48 hours. They handled 32,000 SKUs in every conceivable shape and size in 110,000 square feet of warehouse space. UPS staff determined where each item went: back to the supplier, back to stock, to a charity organization or to a recycling/disposal site. This eliminated stockpiles. And with world-class warehouse management, process and efficiency, Overstock could also handle the challenge of fluctuating volume.

The Results

In just 18 months, Overstock saw customer increased repeat rates, a higher net promoter score, improved cash flow and…$2 million in cost savings. With 99.9% inventory accuracy. (Industry best-practices is 95%.) Overstock’s fulfillment technology, a gold standard in online retailing, easily accommodated UPS’s shipping and tracking tools, which led to better returns KPIs—more than 99.9% on-time processing, order fulfillment and throughput accuracy. Shipping speed improved and Overstock had unprecedented visibility. Best of all, customers got refunds sooner…and loyalty deepened.

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