Overstock.com Prez sets feeble excuse record
Swelling Q3 loss and IT meltdown 'his bad'
Lingering evidence of the dot-com bust appeared last week as Overstock.com tried to explain an expanding third-quarter loss and a technology disaster. In the good old days, start-ups could dismiss a poor performance with but a smile and few encouraging words. These days, however, internet companies must display a hard-nosed, no nonsense approach to their business.
Take, for example, Overstock President Patrick Byrne's defense for the $14.2m third quarter loss.
"My bad," he wrote to investors in an open letter.
No, seriously. He did.
"I bit off more technology projects than my colleagues could chew. The last bite, an ERP implementation, was one bite too many, and we choked on it."
Many Overstock.com investors may have choked as well on Byrne's feeble attempt to accept responsibility for a technology disaster. Overstock's transition to a new ERP system left it unable to tell customers the status of their orders or to provide any shipping information. Overstock's tracking systems were down for close to a week. In total, a shocking display for a supposed internet-savvy retailer meant to compete with the likes of Amazon.com and eBay.
"We anticipated that a small number of background processes would fail, but we had more trouble than expected," Byrne continued. "Rather than pass the problem to the customer in the form of bad service, we ate the cost by doing a great many things manually that would normally be done automatically."
Customers, however, did receive bad service. The web is littered with complaints of missing or delayed shipments still occurring to this day. In addition, Overstock's customer service department has developed a reputation as one of the worst in the industry. A collection of some of the company's more embarrassing debacles can be found here. It makes for great reading.
This week, we tried to investigate some of the complaints, but Overstock declined to return our phone calls. The company's customer service line also automatically hung up on us no matter which option we picked. That makes it very tough to find more information about an order.
Somehow, Overstock managed to pull in $169m in revenue - a 64 per cent year-over-year rise. But its net loss swelled to $14m from just $3m in the same period last year.
It should come as little surprise to learn that Byrne was recently unseated as Chairman of the company by his father, John Byrne. "My bad" doesn't typically get executives very far even with their dads. ®