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After reporting a $16 million loss for the first three quarters, Overstock.com said Tuesday it is backing off its multimillion-dollar effort to rebrand itself as O.co.
The Salt Lake City company had engaged in a nearly six-month effort to rebrand in order to better reflect its evolution from an online marketer of liquidated merchandize to one that also sells brand name apparel, electronics and home décor, as well as insurance.
But it recently reported that its revenue had decreased by $5.7 million, or 2 percent, and its net loss was $7.8 million for the third quarter that ended Sept. 30, compared with the same period last year. For the first nine months of 2011, the loss more than double that.
It blamed the falling revenue on a decrease in promotions but admitted "our current efforts to rebrand ourselves from Overstock.com to O.co may have contributed to the decline."
Overstock.com President Jonathan Johnson declined an interview request Tuesday but said in a statement in a question-and-answer format that customer reaction caused the company to rethink O.co.
"We have been listening and have learned that we've moved too quickly in the transition," said Johnson.
Company shares rose 15 cents, or 1.82 percent, to finish Tuesday at $8.41 in trading on the Nasdaq exchange.
Abbie Griffin, chair of the marketing department at the David Eccles School of Business at the University of Utah, blamed the failed rebranding on the poor choice of O.co as the new name and Internet domain.
"Overstock.com is very descriptive of what the business model was," she said. "If you look at O.co, it completely lacks a description of any kind of what the store is now. So even though it may be cuter or fewer key strokes to get to the website, unless you've got a really strong following who knows who you are and are loyal, it's going to make it much harder to attract new people to your site."
Overstock.com said in its earnings report that new-customer growth fell about 8 percent in the third quarter, compared with the same period last year.
In April, Overstock.com said it paid $7.2 million to acquire the naming rights to the Oakland-Alameda County Coliseum in California, home of the NFL Raiders and major league baseball's Athletics. Then in June, the company announced the facility would be known as O.co Coliseum.
"Our customers associate 'O' with Overstock.com, which made the transition to O.co seamless," Overstock.com Chairman and CEO Patrick Byrne said in statement announcing the name change.
The company said Tuesday it will keep the O.co name on the coliseum and would continue to use that name for international operations. But it will still be known as Overstock.com in the U.S. for now, with O.co called a "shortcut" to the company's website.
Johnson said the company expects that "O.co will continue to emerge as our brand over time."
The U.'s Griffin said that Overstock certainly isn't the only company to fail at rebranding. In the mid- to late 1990s, Fedex was unsuccessful in trying to rebrand as FDX, which it thought would better reflect its range of business services, she said.
Amway tried to become Quixtar, Pizza Hut tried to become The Hut, and International Truck and Engine Corp. wanted to become Navistar, Griffin said.
"I think sometimes there are good reasons why a company wants to go through a rebranding," she said. "But in the vast majority of rebrandings, I don't see a point and I certainly don't think rebranding is a good idea when you go from a name that is known and actually descriptive of what you do to a name that does not at all describe what you do now."
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