Byrne | e - business | online part | Warren Buffet
In Praise Of Vultures
by
Carrie Loranger Gaska
Byrne has had help honing his bargain-hunting instincts. Warren
Buffet, the worldwide shaman of value investing, was a friend of
Byrne's father, and he indoctrinated Byrne junior in the creed of
long-term value. Later, Byrne served a stint as CEO at a subsidiary
of Berkshire-Hathaway, Buffet's company. The connection can't have
hurt when Byrne went looking for backing for Overstock.com; the
company raised tens of millions in venture funding, including
several million from Byrne's
own pocket.
According to Byrne, Overstock.com was the first cyber-liquidator to
show a profit and did so in one year and with only $27 million in
capital. In comparison, he says, other e-tailers have spent years
and hundreds of millions, and they have yet to turn a profit. His
site's sales were $7.5 million in November, $9.3 million in
December, and $6.2 million in January. Byrne says that translates
into profits of about $100,000 a month, and he sees no end in
sight.
Opportunity In Excess
Great business, right? For Byrne and the baker's dozen or so of
other inventory liqui- dators, several of which now do business
online, probably so. Webmergers.com reports that about a quarter of
the more than 210 e-businesses that folded in 2000 sought to sell
their merchandise and other assets, and they aren't the only
sources of excess inventory. Manufacturers that overproduce to
avoid shortfalls to big customers, retailers that turn to jobbers
to sell off unsold items - excess inventory is a $59 billion
business, and the online part of it is growing. The e-business
research and analysis firm AMR Research predicts that the online
portion of excess inventory market will grow to 34 percent of the
total excess inventory business by 2004, from a minuscule 1 percent
now.
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