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CORRESP
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December 4, 2009

DIVISION OF

CORPORATION FINANCE

Mail Stop 3561

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549-0404

  Attention:

  Andrew Mew

  Accounting
  Branch Chief

  Division of
  Corporation Finance

  Re:

  Overstock.com, Inc.

  SEC Comment
  Letter dated November 3, 2009

  Form 10-K
  Amendment No. 1 for the fiscal year ended December 31, 2008 Filed
  March 5, 2009

  Form 10-Q for
  the fiscal quarters ended June 30, 2009 Filed July 31, 2009

  File
  No. 000-49799

Dear Mr. Mew:

We write in
response to your letter dated November 3, 2009 regarding the
above-referenced filings. The following responses are numbered to correspond to
the Staff’s comments:

Form 10-K/A
Amendment No. 1 for the Fiscal Year Ended December 31, 2008

Management’s Discussion and Analysis
of Financial Condition and Results of Operations, page 47

Critical Accounting Policies and
Estimates page 49

Revenue recognition, page 49

1.                                      We note your response to
comment one of our letter dated October 1, 2009. Please address the following:

·                  We note you generally randomly select
the shipment tracking numbers for approximately 1200 orders. Please explain to
us what you mean by generally. If your sample size is not random, then please
explain to us how your sample is statistically valid.

Our use of “generally” was in reference to the number
of orders we desire to sample, not our methodology. We have applied a
consistent methodology to determine our revenue deferral — with variations related to sample size.
We sample at least 300 shipments in each of our four

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shipment types (core LTL and NON-LTL shipments and
partner LTL and NON-LTL shipments) on a judgmental, non-statistical basis,
except in cases in which the underlying population size does not necessitate
such a large sample (see discussion and table below in response to your second
bullet point comment).

We use a random number generator to determine which
items to select for our sample of shipments. Consequently, we believe that our
sampling methodology is valid.

·                  Of the orders shipped per month,
please explain to us how many are core versus partner shipments. Of the core
and partner shipments tell us approximately how many are Core Less-than-Truck
Load (“LTL”) and Core UPS, and Partner LTL and Partner UPS. If your core and
partner orders are not distributed on a 25% LTL and UPS basis, then please
explain to us how your sample size is sufficiently designed to produce a
reasonably acceptable confidence interval. Further, for the six months ended
June 30, 2009 you derived approximately 82% of your net revenues from
partner sales, although it appears your sample size of 1200 was evenly
distributed between your partner and direct shipments. In this regard, tell us
the confidence interval your sample size provides and explain how you concluded
your sample size is statistically sufficient.

When we make our quarterly estimate of average
shipment transit time, we treat each of our four shipment types (core LTL and
NON-LTL shipments and partner LTL and NON-LTL shipments) as a separate
population to which the results of the applicable sample are applied. We sample
an adequate number of shipments in each of these populations to arrive
at an average transit time for the respective population.

The table shown below outlines the shipment population
and sample size for our four shipment type populations for June and
September 2009, which we used to arrive at our estimate of average
shipment transit times in our Q2 and unreviewed Q3 2009 Form 10-Q’s:

  Shipment Type

  Actual Shipments and Sample Sizes

  Core

  Partner

  by Shipment Type

  LTL

  NON-LTL

  LTL

  NON-LTL

  Total

  No. of Shipments in
  June 2009

  784

  120,770

  3,530

  529,420

  654,504

  Sample size used in June 2009

  325

  554

  415

  543

  1,837

  No. of Shipments in
  September 2009

  427

  119,490

  4,876

  622,885

  747,678

  Sample size used in
  September 2009

  182

  920

  539

  720

  2,361

We do not use a purely statistical model to determine
our average transit time. However, we apply various statistical concepts in
determining our sample sizes. Consequently, we believe that our sample sizes
are sufficient to estimate average transit times.

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2.                                      We note your response to
comment three of our letter dated October 1, 2009. Please provide to us
your entire SAB 104 revenue recognition analysis with respect to your
international sales. Please advise if your customers specifically acknowledge
that, upon delivery to the third party, you have no further obligation and the
customer must look solely to the third party to obtain final delivery of the
products.

The following is our SAB 104 revenue recognition
analysis with respect to our international sales:

Background

We use E4X, Inc. (“E4X”), a US-based third party
logistics company, to provide the payment and fulfillment logistics for all
international orders.

Our webpage

(see
https://help.overstock.com/cgi-bin/overstock.cfg/php/enduser/std_adp.php?p_faqid=63&)
includes a section entitled “Special Terms for Our Non-U.S. Customers” which
includes the following points relating to international orders:

·                  We use a third party provider to assist us with
international orders;

·                  At check-out the international customer is redirected
to a checkout page hosted by E4X;

·                  Payment and shipping information is provided to E4X
and E4X approves the order, prior to submitting this approval to us;

·                  Once notified by E4X of the approval, we process the
order and ship the product directly from our warehouse; or cause one of our
third party fulfillment providers to ship the product directly from their
warehouse, to E4X;

·                  E4X thereupon purchases the product from us, taking
title to the product, E4X bills the customer’s credit card, collects and remits
any duties and taxes to the appropriate taxing authority and arranges for the
product to be delivered to the customer’s doorstep by common carrier; and

·                  When ordering, the customer is presented with E4X’s
terms and conditions to which they must agree in order to receive the
product they ordered.

The following are several of E4X’s significant terms
and conditions which are presented to the international customer at check out:

·                  Nature of Transaction. E4X, Inc. (“E4X”) contracts with
suppliers in the U.S. (“suppliers”) to avail their merchandise to consumers
living outside of the U.S. (“you”) through the FiftyOne network, and to provide
you with an opportunity to purchase such merchandise at a price in a currency
selected by you, inclusive of international shipping costs, brokerage costs,
import duty and sales taxes. By placing an order with E4X, you acknowledge
that your transaction will be with E4X, not with the supplier, and that upon
successful verification by E4X of the authenticity and sufficiency of the
payment information you provide, that E4X will purchase the merchandise from
the supplier for the sole purpose of immediately reselling it to you for the
amounts presented to and

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agreed-upon by
you.  (Emphasis
added.)

·                  Title to Goods. After E4X purchases and takes title of
merchandise from a supplier to fulfill an order you have placed, title of merchandise
shall transfer from E4X to you at the time of shipment of the merchandise from
E4X’s facility in the U.S.

·                  Returns. You agree to contact the Supplier whose
merchandise you have purchased for any returns authorization. If authorized by
the Supplier, pursuant to their international returns policy, Supplier will
provide you with information on credit available to you and instructions on
where to ship your return parcel.

Analysis and Discussion

The following is
the SAB 104 revenue recognition analysis based upon our agreement with E4X and
between E4X and our international customers:

·                  Persuasive
evidence of an arrangement does exists — At final check-out, our international customers are
directed to the international “Shipping, Billing & Final Order Review”
page where we make it clear that by placing the order the customer is
confirming that the customer is bound to the terms of the sale. This
page includes a link to E4X’s terms and conditions which make it clear
that the international customer is the customer of E4X.  Once the buyer accepts these terms and upon
successful verification by E4X, E4X purchases the merchandise from us per our
agreement with E4X.

·                  The
seller’s price to the buyer is fixed and determinable — In accordance with the terms of our
agreement with E4X, our price to E4X is fixed at the time the customer places
the order. The “Shipping, Billing & Final Order Review”
page shows the customer the order’s unit price with applicable shipping
charges, applicable taxes and the total cost, which the customer reviews,
before confirming the order as detailed above.
The price to the international customer is calculated by E4X and is
inclusive of currency exchange rates, international shipping costs, brokerage
costs, import duty and sales taxes.

·                  Collectability
is reasonably assured — Upon approval of the international customer’s order, E4X pays us via
its own credit card. We then verify, approve and collect E4X’s payment through
our merchant account processor. E4X is responsible for authenticity and
sufficiency of the payment information of our international customers.

·                  Delivery
has occurred or services have been rendered — In accordance with Section 11.1 of our E4X
agreement and the “Title of Goods” paragraph in E4X’s terms and conditions, title
to our products transfers from us to E4X at the time E4X takes possession of
the products at its US hub facility.  E4X
purchases the merchandise originally ordered by the international customer from
us and resells the merchandise to the international customer (see the “Nature
of Transaction” paragraph in E4X’s terms and conditions above). E4X then ships
the product to the international customer. Section 5.6 of our E4X
agreement (“Risk of Loss While in E4X Care”), states that “from the time that
E4X takes possession of the product at the US hub until the time of receipt by
the delivery carrier E4X is liable for any loss.” With regard to final delivery
and return of purchased products, our international customer may contact our
customer service department for resolution of

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their issues and
we coordinate with E4X on the appropriate action to take on their behalf.

Conclusion

Based on our SAB
104 analysis, we conclude that it is appropriate to recognize revenue for sales
to our international customers upon delivery of the merchandise to E4X’s hub facility. However, we
have also determined, based on our past and current levels of international
sales, that if we deferred the revenue related to our international sales until
delivery to the final customer (instead of upon delivery to E4X) the impact
would be immaterial. For example, the impact of deferring revenue related to
our international sales until final delivery would increase our net loss for
the year ended 2008 and the nine months ended September 30, 2009 by
$22,000 and $40,000, respectively or approximately 0.2% and 1.6% of 2008’s
annual net loss and 2009 Q3 year to date net loss, respectively (see
Exhibit B).

Commentary
— Gross Profit and Gross Profit Percentage, page 57

3.                                      We note your response to
comment seven of our letter dated October 1, 2009. Please address the
following:

·                  It appears you had an agreement
already in place with respect to how you recover costs associated with the
return of products. Please refer to Section 3 of your Supplier Agreement
provided to us in your response letter dated December 14, 2007. Further, we
note you negotiated a settlement in early November 2008 based on a current
existing agreement in place which specified how return costs were to be
recovered from your partners; and, Section 1.11 of the agreement, provided
for a contractual right of offset. It appears you provided return processing
services for your partners under contractual agreements, which resulted in net
cash inflows to you. The cash inflows were directly related to your past
activities associated with the returns of your partner’s products. See
paragraph 28 of Statement of Financial Accounting Concepts No. 6. Absent
further substantial evidence, we are uncertain how you reached the conclusion
that an asset did not previously exist or had not been earned. Please explain
in detail or revise your accounting.

Although we had an agreement in place with respect to
the recovery costs associated with the return of fulfillment partner products
and we had a contractual right to recover the negotiated amount through the
right of offset, we concluded that an asset did not exist or an amount had not
been earned at any time during 2007 or 2008, as detailed within Issue
No. 1 of Exhibit A, “Complete Partner Under Billings and Overpayment
Background, Discussion and Conclusion Memo” attached hereto.

·                  Please explain the basis for your
statement that the amounts had not been earned as they were dependent on future
sales; and, the accounting principle underlying your recognition of a past
transaction based on a future sale.

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Given the facts surrounding the transactions, our past
practices and our resulting conclusions detailed in Exhibit A, “Complete
Partner Under Billing and Overpayment Background, Discussion and Conclusion
Memo”, we concluded that an asset did not exist at any time during 2007 or 2008
as detailed in Issue No. 2 of Exhibit A, “Complete Partner Under
Billings and Overpayment Background, Discussion and Conclusion Memo.”

·                  We also noted approximately half of
your total 2008 under billings were comprised of 28 partners with balances in
excess of $20,000. We assume you had historical revenue data from these
partners which would have afforded you the ability to determine how long it
would have taken to recover these under billings or assess the realization of
the amounts owed to you, assuming you closely track sales data for your largest
partners. We calculated you recovered approximately 67% of the 2008 under
billings in the fourth quarter of 2008, and by the end of the first quarter of
2009 you collected approximately 84% of the under billings related to 2008.
Notwithstanding the above comments, it appears the collection of under billings
was reasonably assured as of December 31, 2008. If our reasoning and
calculations are valid, explain to us why such recoveries were not considered
previously realizable, especially from your largest partners, with a reserve
established for any amounts considered doubtful. Please advise or revise.

We concluded that an asset did not exist at any time
during 2007 or 2008 as detailed in Issue Nos. 1 and 2 of Exhibit A,
“Complete Partner Under Billings and Overpayment Background, Discussion and
Conclusion Memo.” While we recognize that reasonable individuals may have
different views regarding the interpretation of the facts and circumstances and
the related accounting model, we concluded that, due to the factors explained
in Exhibit A, an acceptable accounting model was fundamentally based upon
an evaluation of whether an asset existed at any time subsequent to our billing
error but prior to recovery of under billed amounts via renegotiated future
pricing with our fulfillment partners.

·                  Reference is made to the issue
involving the overpayment of costs of $787,000 to your partner. Similar to the
under billing issue, it would appear an asset existed for the overpayment of
the partn