The Customer Effect

Inside Overstock.com’s financial services strategy

  • For the past few months Overstock has been building a marketplace for financial services spanning credit cards, insurance plans, loans, automated investing and equity trading
  • Overstock's financial services “strategy” is an extension of the company’s retail function — buying and selling consumer goods
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Inside Overstock.com’s financial services strategy

Add Overstock to the major retailers blurring the lines between retail, technology and financial services.

For the past few months, the 19-year-old e-commerce company has been quietly building out FinanceHub, a sort of marketplace for financial services that includes existing Overstock credit cards and insurance products; loans by LendingTree, Prosper and Sofi; a robo-adviser for automated investing, as of last week — and as of Tuesday morning, a discounted trading platform.

The platform and Overstock’s broader financial services “strategy” is nothing more than a natural extension of the company’s retail function, buying and selling consumer goods, according to Raj Karkara, Overstock’s vice president of loyalty and financial services.

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“It’s all about providing the best value to the consumer: best in class products and experiences. The experience part is something that traditional financial institutions haven’t focused on but they’re turning that around now,” he said. “Consumers don’t want to sit and sign 50 documents, they just want to go online and get through the steps they need to take to move forward.”

There may seem to be no relationship between selling a couch and selling a financial product. But the lines are blurring, said Karkara, and its more obvious outside of the U.S., with U.K. grocer Tesco, for example and its checking accounts, credit cards and insurance plans.

Like any good fintech company, it’s also got a content marketing section on the site that doesn’t totally sell financial products to customers but gives advice for customers to make their own decisions about their financial needs and ultimately come back to the site for a loan. Karkara declined to say what its next move will be but said there’s “a lot coming down the pipe” for the FinanceHub.

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Overstock has been looking for ways to strengthen customer experiences and relationships with financial innovations for quite some time. In 2014 it began accepting bitcoin for purchases. As of August 2017, it also accepts 40 different cryptocurrencies as payment. Karkara didn’t rule out the possibility of providing a crypto trading platform, but it isn’t doing that now. In 2015 it added Klarna, a purchase financing startup and Affirm-competitor, to its checkout experience. The Overstock branded credit cards it offers don’t charge interest to customers who take those loans. It also has a subsidiary called tZero that’s dedicated to developing and commercializing blockchain technology for financial applications, which powers its recently launched digital investment platform.

“We have the relationship and ability to help them save money, so this is a natural progression, extending the relationship to other financial products.”

Overstock gets 40 million unique visitors to its main site each month but doesn’t yet have numbers to disclose on the traffic to the FinanceHub, which is less than six months old. Karkara did not rule out the possibility that the company might apply for a banking license “one day” but confirmed it isn’t currently pursuing that. (And why should it? Like one of its obvious competitors, it probably just wants to give its customers the tools that enable them to buy more things from Overstock.)

“Our goal is to bring products to market faster,” Karkara said. “We want to expand the customer relationship as much and as fast as we can and do it in a seamless manner.”

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