SecProbe.io

February 11, 2011
  Mr. Stephen J. Chesnut Senior Vice President, Finance and Risk Management        Overstock.com, Inc.         6350 South 3000 East        Salt Lake City, UT   84121

Re:  Overstock.com, Inc.             Form 10-Q for the Quarterly Period Ended September 30, 2010
            Filed October 29, 2010             File No.  0-49799
Dear Mr. Chesnut:
 We have reviewed your supplemental response letter dated February 3, 2011 and have the
following comments.               Form 10-Q for the quarterly period ended September 30, 2010

2. Accounting Policies, page 7
Sales returns allowance, page 12
1. We acknowledge your response to comment one to our letter da ted January 11, 2011.
Explain to us in detail the events that nece ssitated the significant provision recorded in
the fourth quarter of 2007 which, in retrospect , led to the gross cumulative excess in the
allowance at the end of fiscal 2007.
2. Refer to response number 28 in your prior lette r dated July 9, 2010.  You discuss various
initiatives you implemented in early and late 2009 which you believe had an impact on reducing returns.  Further, you state, “We m onitored the impact of these initiatives in
2009, particularly during Q4 2009 following the introduction of  the new supplier
agreement, and determined at the end of 2009 that there was sufficient evidence of a sustained downward trend in re turns from these initiatives (versus temporary or seasonal
trends) and accordingly reduced our sales re turns allowance based upon our analysis of
trailing twelve month results.”  Based on th e information you have provided us, it is not
clear how you concluded a downw ard trend in returns became  apparent by the end of
fiscal 2009 or early 2010.  In this regard, we note the follo wing from your Exhibit 1:

• Actual returns as a percentage of re venue on a trailing twelve month (“TTM”)
basis decreased 4% from the fourth quar ter of fiscal 2008 as compared to the
fourth quarter of fiscal 2009.

Mr. Stephen J. Chesnut Overstock.com, Inc.
 February 11, 2011  Page 2

 • Actual returns as a percentage of reve nue on a TTM basis increased by 5% from
the first, second and third quarter of fis cal 2008 as compared to the first, second
and third quarter of fi scal 2009, respectively.
• Actual returns as a percentage of revenue on a TTM basis only decreased by 3%
in the fourth quarter of 2009 from th e third quarter of fiscal 2009.
Please explain to us how a nominal decrease  in the 2009 fourth quarter actual return
experience on a TTM basis combined with the above factors justified the reduction in the
gross cumulative excess in your allowance at fiscal year-e nd 2009 by over 77%.  Further,
it would appear that th e downtrend in returns manifested it self in the fourth quarter of
fiscal 2009.  If this is the case, it is unclear to us whether you had sufficient experience to
adequately conclude there was a sustained dow nward trend in returns as of December 31,
2009.   Please explain to us how you could ha ve reasonably concluded that sufficient
evidence of a sustained downwar d trend in returns from these initiatives was established
at the date the allowance for sales returns was substantially reduced.
3. Exhibit 1 indicates that the amount charged to your statements of operations (“the
provision”) as a percentage of revenue was 11% in the fourth quart er of 2007, 9.8% in the
fourth quarter of 2008, and 7.1% in the fourth  quarter of 2009.  In fiscal years 2007 and
2008, the quarterly provision as a percentage of revenue was hi ghest in the fourth quarter
consistent with your July 9, 2010 response to prior comment 28.  In fiscal 2009, your
fourth quarter provision as a per centage of revenue was the lowest of any quarter in fiscal
2009.  Further, the provision recorded in th e fourth fiscal quarter of 2009 is a full
percentage point below the provision as a pe rcentage of revenue on a TTM basis of 8.1%
whereas in the fourth fiscal quarter of 2008 and 2007 the provision as a percentage of
revenue significantly exceeded the provision as a percentage of revenues on a TTM basis.
We also note from Exhibit 3 that the vast majo rity of sales returns related to your fourth
fiscal quarter 2009 were pro cessed before you filed your Form 10-K for the year ended
December 31, 2009.  In this regard, it appears 98 % of the returns related to sales made in
fourth fiscal quarter of 2009 were pro cessed through the end of February 2010.
Therefore, it would appear you could have f actored into the fourth quarter 2009 provision
the actual return experience subsequent to ye ar end.  Please explain why the provision for
the fourth quarter of 2009 was uncharacteristically low.
4. You disclose that your actual product return s have not differed materially from your
estimates.  It appears from the informati on you have provided that you were significantly
over reserved at the end of fiscal 2007 a nd 2008 and continue to be over reserved,
although less so, at the end of fiscal 2009.  Please explain to us how you were able to
conclude that the differences between your es timates and actual retu rn experience were
not material to your net income (loss).
5. Please show us how you calculate d the effect on net income (l oss) if booked to actual
reflected in your Exhibit 2a.

Mr. Stephen J. Chesnut Overstock.com, Inc.
 February 11, 2011  Page 3

 6. You disclose on pages 57 and F-16 of your 2009 Form 10-K “We are not currently aware
of any trends that would significantly cha nge future returns experience compared to
historical experience.”  Pleas e explain to us how you concluded that your reduction of the
sales return reserve from 2008 to 2009 was due to no apparent material reason as
suggested by your disclosure or re vise your disclosure accordingly.
7. You disclose in each of your quarterly repor ts for 2010 that the decrease in the sales
returns reserve compared to December 31, 2009 is primarily due to decreased revenues due to seasonality.  We are not clear how or to  what extent your initiatives are having an
impact.  If your initiatives are having an im pact on your allowance in  2010, please revise
your disclosure as previously requested.

As appropriate, please amend your filings and respond to these comments within 10
business days or tell us when you will provide us with a response.  You may wish to provide us
with marked copies of the amendments to expedite  our review.  Please furnish a cover letter with
your amendments that keys your responses to  our comments and provides any requested
information.  Detailed cover letters greatly facilitate our review.
 Please submit your cover lett er over EDGAR.  Please unde rstand that we may have
additional comments after reviewing your amendments and responses to our comments.

You may contact Robert Babula,  Staff Accountant, at 202-5 51-3339 or Donna Di Silvio,
Staff Accountant, at 202-551-3202 if you have questions regarding these comments on the
financial statements and related matters.  Pl ease contact me at 202- 551-3720 with any other
questions.

Sincerely,
   /s/ Andrew D. Mew
   Andrew D. Mew    Accounting Branch Chief