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December 14, 2007

By EDGAR
and by Facsimile to (202) 772-9202

Securities and Exchange Commission

100 F Street

Washington, D.C.  20549

  Attention:

  Millwood Hobbs

  Staff Accountant

  Division of Corporation
  Finance

  Re:

  Overstock.com, Inc.

  SEC Comment Letter dated
  November 15, 2007

  Form 10-K for the
  fiscal year ended December 31, 2006

  Forms 10-Q for the fiscal
  quarters ended September 30, 2007, June 30, 2007 and March 31,
  2007

  File No. 0-49799

Dear Mr. Hobbs:

We write in response to your letter dated November 15,
2007 regarding the above-referenced filings.
The following responses are numbered to correspond to the Staff’s
comments.

SEC Comment — 1.  Where a comment below
requests additional disclosure to be included, please show us in your
supplemental response what the revised disclosures will look like.  These additional disclosures should be
included in your future filings.

See responses below.

SEC Comment — 2. Please disclose
in tabular form for each period presented the amount or percentage of total
revenue contributed by each class of similar products or services.  See Item 101(c)(1)(i) of Regulation S-K.

Below is a table showing the percentage of
total revenue contributed by each class of similar products or services. We
based our classifications on how management views our business. We will include
this table in the MD&A section of future Reports on Form 10-K.  For 2007, 2006 and 2005, the percentages of
sales contributed by similar classes of products were as follows:

  Percentage of Sales

  Category

  2007

  2006

  2005

  BMMG(1), electronics and
  computers

  20

  %

  22

  %

  22

  %

  General merchandise

  80

  %

  78

  %

  78

  %

  Total

  100

  %

  100

  %

  100

  %

(1) Books, magazines, CDs, DVDs,
videocassettes, and video games.

SEC Comment — 3. We note that you
classify in fulfillment partner revenue amounts received for commissions and
fees earned from various services rendered.
Please revise your presentation in the statement of operations to
separately report these amounts as service revenue distinct from product sales
to comply with Rule 5-03(b)(1) of Regulation S-X.

The fulfillment partner commissions and fees
we earn are for our Auctions and Cars businesses (as we have disclosed in
previous SEC filings).  The combined
total revenue from these services falls beneath the 10% threshold referred to
in Rule 5-03(b) of Regulation S-X (they account for less than one-half
of one percent of total revenue).
Therefore, we do not separately present these amounts on our statement
of operations, but classify them within fulfillment partner revenue.

SEC Comment — 4.  According to your website, you sell an
extended warranty protection plan to your customers.  Please disclose your accounting policy for
this program and tell us the nature of the program and who is the primary
obligor.  Tell us your basis for how you
report the sales and costs related to the sale of the warranty program and if
your accounting complies with FTB 90-1.
If the nature of the warranty program you sell requires you to estimate
the costs relating to your obligations, tell us what consideration you gave to
including in management’s discussion and analysis a discussion of these costs
among your critical accounting estimates.

For nearly all of our fulfillment partner sales
transactions, we are the primary obligor and therefore our accounting policy is
to record our fulfillment partner sales on a gross basis.  However, the extended warranty protection
plans that we sell are serviced through a fulfillment partner who is the
primary obligor. Thus, FTB 90-1 does not apply.
Under GAAP, we should recognize the revenue and related expenses at the
time of sale on a net basis as we are not the primary obligor. However, as a
matter of convenience we have historically recorded the revenue related to the
sale of extended warranties in the same manner as most other fulfillment
partner revenue (i.e., on a gross basis) because these sales are immaterial to
our financial statements as a whole.

In assessing materiality, we noted that the
maximum effect on total revenue (if we were to have recorded extended
warranties on a net basis rather than a gross basis) for the annual periods of
2005 and 2006 totaled 0.17% ($1.3 million of warranty revenue on $796.4 million
of total revenue for fiscal 2006).  For
the quarterly periods from Q1 2006 through Q3 2007, the maximum effect on total
revenue was 0.20% ($325,000 of warranty revenue on $158.7 million of total
revenue in Q3 2006).  After considering
the other factors mentioned in SAB 99, we conclude that the effect of this
change is immaterial. However, in future filings, we will record future
extended warranty revenue on a net basis.

SEC Comment — 5.  You disclose that revenue is recognized when
products are shipped to customers.
Please expand your disclosure to state when title transfers to the
customer.  Supplementally please explain
to us how your accounting policy for

direct revenue sales complies
with the delivery and performance requirements of SAB Topic 13:A.  If shipping terms determine risk of loss
during shipment and/or title transfer to the customer, please explain them to
us and revise your disclosure to clarify these terms.  If revenue on direct revenue sales is
recognized prior to the transfer of title and delivery of the product to the
customer, please clarify how your policy complies with GAAP.

To your first request, we will expand our
revenue recognition disclosure for direct revenue to state when title transfers
to the customer by adding the following statement:

“Direct revenue related to
merchandise sales is recognized pursuant to a sales contract that provides for
transfer of both title and risk of loss to the customer upon delivery to the
carrier.”

Applying the delivery and performance
requirements of SAB Topic 13:A to our accounting policy for direct revenue recognition
yields the following facts by each point (numbered to correspond to the
applicable SAB Topic 13:A provisions):

1.                           Legal title
passes at the point of shipment. Our business policy is that title and risk of
loss pass to the customer once the product is delivered to the carrier.

2.                           We have no
legal obligation to compensate the customer for goods that are lost or damaged
in-transit.

3.                           The arrangement
meets all other revenue-recognition criteria (evidence of an arrangement
exists, our selling price to the customer is fixed or determinable, and collectibility
is reasonably assured).

4-6.                 Although we have no legal
obligation to compensate the customer for goods that are lost or damaged in
transit, it is industry practice (and is required by the carrier since items
are shipped on our account with the carrier) that we act as the liaison between
the customer and the carrier if a product is lost or damaged in transit.
Therefore, we generally replace the product or reimburse the customer for goods
lost or damaged in transit, and then subsequently file a claim for
reimbursement from the carrier.

Based on the above analysis of the
performance requirements of SAB Topic 13:A, and under the strict definition of
risk of loss as defined in SAB Topic 13:A, we conclude that the full risk of
loss does not pass to the customer until delivery of the product. Therefore, under
a strict interpretation of SAB Topic 13:A, our direct revenue sales arguably should
be classified as “synthetic FOB destination,” meaning that we would record
revenue at the estimated delivery date, not the ship date.

However,
we believe that practical application points to our continued use of ship date
due to the following facts:

1)              The difference between recognizing
revenue on known ship date or estimated delivery date is immaterial to our
financial statements as a whole. In order to analyze the
materiality of recording direct revenue based on estimated delivery date rather
than a known ship date, we reviewed shipping and sales data related to
merchandise we shipped immediately prior to the period ends for fiscal years
2006 and 2005 and for each fiscal quarter from Q1 2006 through Q3 2007 (periods
to be presented in the 2007 Form 10-K).
We sorted this data by shipping zone and originating warehouse.  We then aligned this data to the estimated shipping
transit time charts for each zone for our primary carriers (United Parcel Service
and ABF Freight).  Because there were no
reports of unusual or delayed shipping services during these periods, we are
confident that the carriers’ estimated standard shipping transit time charts
were appropriate for use in developing our estimate.  We next analyzed the difference between
recognizing revenue at ship date versus at the estimated delivery date.  After factoring in the roll-over effect of
such differences (for thousands of individual orders with an average order size
of approximately $120), the maximum effect on total revenue and net loss for
any annual period analyzed totaled 0.35% and 1.63%, respectively. The maximum
effect on total revenue and net loss for any quarterly period analyzed totaled 1.14%
and 1.70%, respectively.  After
considering the other factors mentioned in SAB 99, we determined that the effect
of this change would be immaterial.

2)              For over 99% of our sales
transactions, the effective risk of loss transfers when we deliver product to
the carrier. Under SAB 13:A, if the customer does not incur
risk of loss on damaged-in-transit or lost shipments, revenue is recognized at
delivery date. However, when analyzing our historical product returns data (2004-2007),
our carriers successfully delivered approximately 28.2 million of the 28.5
million orders placed on our website during that four-year period,
approximately 99% of total orders (meaning only 1% of those orders were
damaged-in-transit or lost during shipment).
Of those orders that were not successfully delivered, we received
reimbursement or returns from our carriers for a portion of the dollar value of
such orders.  Thus, we believe that a
package is effectively “delivered” at the time it is picked up by the carrier.

3)              The financial impact of any
remaining obligation we have is immaterial, and is properly accounted for
within our existing sales return reserve. We account for the
estimated loss from damaged or lost shipments (net of our estimated claims
recovery rate with the carriers) within our existing sales return reserve.

4)              We can measure ship date more
accurately than estimated delivery date. By using our known ship
date, we (and our outside auditors) can verify revenue cutoff down to the
individual invoice based on tracking information provided by the carrier.  In addition, our financial system (which has
numerous automated controls) records revenue based on a known ship date.

While this was not requested
by the SEC, we also reviewed the six delivery and performance requirements of
SAB Topic 13:A discussed above for our fulfillment partner sales.  We determined that these six requirements also
applied to fulfillment partner revenue, because our shipping practices are the
same whether we ship products directly or whether a fulfillment partner acts as
our agent in shipping the product.  As
noted in greater detail in response to the SEC’s comment 6, to our customer,
the source of the product is indistinguishable.

As a result, we performed a
similar SAB 99 analysis for fulfillment partner revenue, and when combined with
the analysis of direct revenue, we determined that the difference between
recognizing revenue based on ship date and estimated delivery date was immaterial.  We noted that, after considering the
roll-over effect of such differences, the maximum effect on total revenue and
net loss for any annual period analyzed totaled 0.72% and 3.37%, respectively.
The maximum effect on any quarterly period analyzed totaled 3.01% and 3.98%,
respectively.  After considering the
other factors mentioned in SAB 99, we determined that the effect of this change
would be immaterial.

In order to be consistent with our direct
revenue disclosure, we will expand our revenue recognition disclosure for
fulfillment partner revenue to state when title transfers to the customer by
adding the following statement:

“Fulfillment partner revenue
related to merchandise sales is recognized pursuant to a sales contract that
provides for transfer of both title and risk of loss to the customer upon
delivery to the carrier.”

SEC Comment — 6.  We note that you report revenue on a gross
basis for sales of merchandise owned by other retailers who provide fulfillment
services and ship merchandise to the customer.
You refer to these sales as fulfillment partner revenues.  In this regard, please provide us with a
comprehensive response explaining why you believe your arrangements with the
fulfillment partners meet the requirements of paragraphs 7 through 14 of EITF
99-19 for gross revenue reporting by separately addressing in detail each of
the indicators discussed in these paragraphs.
In your response, please clarify how the ordering and shipping process
operates for these sales, when title to the merchandise is transferred from the
partner to you and when title is subsequently transferred to the customer.

Following are points 7-14 of EITF 99-19 and
an explanation of the related facts that correspond to each point:

7.              The company is the primary obligor in the arrangement.

We sell a broad range of products under the
Overstock.com brand name. We own some of the inventory we sell, and we source
some of it from third parties (i.e., fulfillment partners). Products sourced from
third-party fulfillment partners are offered alongside our own products, and
the source of the product is indistinguishable to the customer. All items are
sold to the customer under Overstock’s “Site User Terms and Conditions”.

We are the primary obligor in fulfillment
partner transactions for the following reasons:

·                  All products
offered on the Shopping website are sold by Overstock regardless of the
source.  Our Shopping site does not
permit third-parties to sell directly to our customers. This is different from our
Auction site, where we record all fees we earn from our Auction website on a
net basis.

·                  We provide the
primary customer service for all products sold on our Shopping website (see
Item 1.8 in Overstock.com Supplier Agreement). Customer interactions are only with
our customer service representatives. If customer inquiries require information
from our fulfillment partners, our customer service representatives work with
the appropriate fulfillment partner to answer the customers’ question or
resolve any issues (see Item 2.5 in Overstock.com Supplier Agreement).

·                  We monitor the
acceptability of the products sourced from all fulfillment partners.  On the front end, we must approve fulfillment
partners before they even submit products to sell on our website.  In addition, all fulfillment partner products
posted for sale on the website must first be pre-approved by Overstock.  After the product sale, in addition to
providing all customer service, we process and take title to the vast majority
of product returns sourced from fulfillment partners to ensure further quality
control (see Item 1.9 and Item 3 in Overstock.com Supplier Agreement).

·                  We have the
right to remove any fulfillment partner product from our website at any time
for any reason or no reason and without notice (see Item 1.2 in Overstock.com
Supplier Agreement).

·                  We require our
fulfillment partners to remove all unapproved marketing information from any
product shipped to our customers, including non-Overstock logos, marketing and
packaging materials.  All pr