Buybuy Baby coin? Legacy retailers are getting caught up in blockchain and crypto
Like many other companies, legacy retailers are experimenting with blockchain technology as either a new line on their balance sheets or to bolster their appeal with investors.
Bed Bath & Beyond and Overstock owner Beyond Inc. earlier this year launched digital tokens tied to its Overstock and Buybuy Baby e-commerce websites that pay out annual dividends to investors based on the retailers’ net sales. When it agreed to purchase Buybuy Baby in February, Beyond Inc. also said that it wants to use blockchain technology to build for customers secure ledgers of significant life events, medical records, educational records and other assets. In March, GameStop’s board approved the use of Bitcoin as an investment asset and announced a $1.3 billion offering of notes that would at least partially fund the purchase of the cryptocurrency.
These moves come as crypto has gotten more attention from investors. Bitcoin surged to a record high since the election of President Donald Trump, who has been supportive of the technology and has launched his own crypto “memecoin.” The U.S. Senate also just further legitimized cryptocurrency by passing legislation creating a framework for stablecoins, or digital tokens pegged to the value of the U.S. dollar.
“I think the appetite and the number of companies that are going to be experimenting with [blockchain and crypto] will increase,” Brad Jashinsky, a retail analyst for Gartner, told Modern Retail. “If major banks start to create some type of stablecoin digital asset, that will most likely make a lot of CFOs more comfortable with maybe experimenting with this, because they already work with a lot of those banks.”
Beyond Inc. and GameStop have taken divergent approaches in implementing blockchain and cryptocurrency alongside their retail businesses, but both are focused more on appeasing the investment community rather than selling shoppers on NFTs, which brands like Nike and Starbucks had tried in previous years. Both programs were short-lived, with Nike facing a class-action lawsuit this year for selling unregistered securities and Starbucks shuttering its program last year.
GameStop’s strategy of simply investing in Bitcoin mirrors those of other companies outside of retail. President Trump’s own media and tech company, Trump Media & Technology Group, on Tuesday announced a $2.5 billion investment in Bitcoin as a treasury asset. Business-intelligence software company MicroStrategy also rebranded earlier this year to reflect its focus on being a Bitcoin investor — it has been buying tens of billions of dollars of the cryptocurrency since 2020. The publicly traded company has become known as a proxy through which shareholders can indirectly invest in Bitcoin.
Beyond Inc., meanwhile, has been investing in blockchain-related technology companies since 2014, when it was just known as Overstock. Marcus Lemonis, who became Beyond’s principal executive officer in March, said on the company’s first-quarter earnings call in April that he believes its partial ownership of digital securities arm tZERO and blockchain-powered agriculture supply chain platform GrainChain have been overlooked by investors.
“We believe that when you look at the market cap of [Beyond Inc.], and you look at the cash that it has, and you look at the brands that it owns, and you look at the blockchain assets that it has, we believe that it is materially undervalued,” Lemonis told investors.
Overstock has a long history with blockchain and crypto, accepting Bitcoin in 2014 before most others in the industry. It also launched an investment arm, Medici Ventures, in 2014, which was focused on blockchain and acted as a wholly owned subsidiary of Overstock. Former Overstock CEO Patrick Byrne launched tZERO in 2017 to create an open alternative to the Nasdaq stock exchange. Medici Ventures first bought a $2.5 million stake in GrainChain in 2021 and has continued to invest in the company.
The Overstock and Buybuy Baby tokens are meant to prove the value of the tZERO platform by taking advantage of the company’s retail brands and helping the company test and understand how to best use the platform. “The idea behind the token wasn’t to raise $100 million; we didn’t need to raise capital,” Lemonis said on the earnings call. “I believe [the tZERO platform] is worth a lot, and so, the only way to [prove] that is to put your money where your mouth is.”
Tom Forte — a managing director and senior consumer internet analyst for investment bank and financial services firm Maxim Group who covers Beyond Inc. and other retailers — said having Buybuy Baby and Overstock digital tokens on tZERO suggests Lemonis may be creating not just a portfolio of digital assets, but a portfolio of digital assets tied to its brands. The company is also working to revive Bed Bath & Beyond and Buybuy Baby’s physical presence through new partnerships and open Overstock stores.
It’s also a marketing effort that could cost less than search engine optimization or Super Bowl ads, he said. And it could additionally encourage other consumer brands to join the platform.
“While they do a good job of tokenizing, or creating digital assets, there are not a lot of digital assets that are on this platform today,” Forte said. “I think this could be a way to restart that initiative and then try to attract others to have digital assets on the platform, which will increase the value of the platform — just like, as more stocks are traded on Nasdaq, that increases the value of Nasdaq.”
Jashinsky said that while lucrative to investors, blockchain or crypto experiments could distract from retailers’ core business. There’s also a difference in investing in Bitcoin, which benefits from scarcity, versus a company launching its own smaller digital assets or memecoins.
“They’re very much for shareholders, looking at how to … hopefully increase stock prices, increase liquidity and put their cash reserves to better use,” Jashinsky said. He added that while it does stray from the core of the business, “if you’re a shareholder and your stock’s increasing, you probably don’t care about that.”