Overstock.com Divulges Secret to Its Cyber Monday Success

Overstock.com Divulges Secret to Its Cyber Monday Success

By Mary Hayes Weier

Wed Nov 28, 4:50 PM ET

Overstock.com was one of the most heavily hit Web sites by the crush of
holiday shoppers looking for bargains during the four day span from
Black Friday through Cyber Monday. It also was among those that
performed exceptionally well under pressure.

Was the success due to investments in technology? Sure, that helped.
But the biggest investment and benefit, said CEO Patrick Byrne, is a
newly expanded internal workforce of Java developers that rehauled the
site around a Web service-oriented architecture to allow for rapid
upgrades in response to consumer activity. The new site went live last
month after about a year of development.

"We had three developers on staff three or four years ago; now we
have over 40 developers," Byrne said in an interview. "We found it’s
worth it to pay up for more expensive and more serious people."

Overstock.com was among the top 10 retail sites in terms of traffic
on Cyber Monday, according to market research-firm comScore (others
included Amazon, Wal-Mart, Target, and Best Buy). It also ranked
second, after Blockbuster, in a four-week measure of availability and
response time among online retailers’ sites, conducted by Web site
monitoring firm Gomez, that concluded on Cyber Monday.

The Monday after Thanksgiving got that name since it’s presumed that
after the long holiday weekend, consumers sit down at their computers,
sometimes at work, and start their holiday shopping. Even though market
research has shown that the busiest online shopping days typically
don’t happen until early-to-mid-December, online sales on Cyber Monday
rose 21% over last year to $733 million, according to comScore.

About a year ago, Byrne and Overstock.com CTO Sam Peterson decided
to rehaul the Web site around the concept of "agile development," where
small teams of developers would work with each business unit to develop
and improve functionality and roll out new releases as needed. That
included moving away from offshore software development, which the
company had used with little success, and toward a much bigger in-house
staff. "Our experience with outsourcing has not been good," said the
ever-outspoken Byrne, who is probably best known for his controversial
allegations of wide-ranging Wall Street conspiracy involving "naked
short selling" of Overstock.com stock.

"I was the biggest proponent — as a stupid, Dilbert management kind
of guy — saying let’s outsource. Now I’ve come completely 180 degrees
to the agile approach," Byrne said. "Programmers sitting side-by-side
with businesspeople designing functionality — that’s one trend," Byrne
said. "The other is taking your software development and moving it to
China or India. You see those two trends are antithetical to each

In rebuilding the site, Overstock moved away from C++ development to
create a site based on Java. That allowed for a service-oriented
architecture, rather than "having one big application talk to one big
database," said Peterson, who joined as the company’s first developer
in 1999. Peterson also is the son of Pete Peterson, the former CEO and
a co-founder of Word Perfect, a popular word processing software prior
to Microsoft’s rise to domination in the 1990s.

Developers also built a new memory-caching layer using Oracle
Coherence, middleware Oracle got with its acquisition of Tangosol
earlier this year, to ensure smooth and rapid site searches for
customers at the site.

Overstock.com‘s site hasn’t always performed well. In late 2005,
Byrne blamed a poor financial quarter partly on Overstock’s rocky
transition to a new ERP system that wouldn’t let customers find the
status of their orders or shipping information for close to a week. The
company continues to struggle financially, reporting a $4.7 million net
loss for its third fiscal quarter ended Sept. 30 on revenue of $161.9
million, up 3% from the same period last year.

A speedy new Web site may not be the key to reversing
Overstock.com‘s slow growth and losses, but it certainly can’t hurt.
And good technical talent working with business people, Peterson
insists, is critical to the Web site’s success.

"The cost advantage we got overseas didn’t make up for the fact that
we don’t have business users on site at the same time," Peterson said.
"We’ve always come back to hiring good quality, highly talented
people." In fact, he said, the Salt Lake City-based company is
currently on the hunt for more Java developers to add to its staff.


See original article on InformationWeek.com

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