October 12, 2000 4:55 PM PDT
Overstock gears up with sporting goods site
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Under terms of the deal, Overstock paid an undisclosed amount of stock for Gear.com, making Amazon a minority stakeholder in Overstock, said Patrick Byrne, Overstock's chief executive.
Overstock also announced that it had paid $2.5 million for the inventories of failed luxury goods site Miadora.com and Jewelry.com, which shut down last month. Overstock specializes in buying inventories of distressed companies at cut rate and selling them at a discount at Overstock.com
Low funding and high spending has fueled the Internet shakeout demolishing so many Net stores. Taking advantage of the situation, Overstock and other online discount stores, such as iSolve, TradeOut and RetailExchange, are cleaning up.
Gear.com, of which Amazon bought a 49 percent stake in July 1999, is the latest of the retailer's holdings to cash out. On Tuesday, Amazon and stalwart auctioneer Sotheby's shuttered its jointly run online store 11 months after launching. Living.com, which occupied a once-treasured tab on Amazon's front door, filed for Chapter 11 bankruptcy protection in August.
Amazon's shares in Gear.com will convert to shares in Overstock, Byrne said.
Gear.com's business model was similar to that of Salt Lake City-based Overstock. The Seattle-based Gear.com bought excess inventories of sporting goods or products from liquidation sales. Late last month, Gear.com appeared to run into financing troubles when it laid off 30 percent of its staff.
"They came to the conclusion that the discount model worked but that it would be better to team up with someone who sold more than just sporting goods," Byrne said. Overstock offers 11 product categories, including jewelry, toys and electronics.
Byrne said that integrating Gear.com could be completed as early next year when the Gear.com brand name will be phased out. Overstock, however, plans to retain all of Gear.com's 45 employees, Byrne said.