Overstock.com's Google Penalty Hurt Sales By Only 5%

Apr 11, 2011 • 9:21 am | comments (10) by twitter Google+ | Filed Under Google Search Engine Optimization

Overstock Google Penalty SalesIn February Overstock.com made news when they were publicly penalized by Google for violating their webmaster guidelines. It is a very interesting story, so go read it over here if you have not done so yet.

What I found interesting is that Overstock.com told Reuters the penalty had a major impact on their earnings. Major? Sales are down 5%! Reuters said:

The lower Google natural search rankings has hurt sales during the penalty period to date by 5 percent and Overstock expects this to continue for the rest of the period.

To be honest, this is nothing compared to what most sites experience when they get hit by a penalty. If any non-major web site was hit by a penalty like this, their sales would be much lower than 5%. This goes to show you, the power of a good brand and alternatives to Google traffic.

I am sure Overstock.com's 5% of sales is way more than a small mom and pop store but still, 5% is 5%.

Are you surprised this Google penalty only had a 5% impact on their sales? Do you think they are fudging the numbers?

Forum discussion at WebmasterWorld.

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Ian Williams

04/11/2011 01:39 pm

Hard to say without further information. For instance, a 5% dip isn't a great deal, but what if the time of year (including Mother's Day, Easter, preparation for summer holidays and so on) normally shows a 10% gain? It is a publicly company so you could reasonably expect some 'tailoring' of stats for the shareholders. It also doesn't factor in other business issues, such as the launch of a UK site, or new line launches. To really understand the impact, you'd want to know yearly month-on-month trends, ideally including both percentage and fiscal values.

Nick Stamoulis

04/11/2011 02:14 pm

Seeing as how some sites seemingly drop off the face of the earth when they get caught defying Google Webmaster Guidelines, 5% doesn't seem that bad. It goes to show that you can't put all your eggs in one basket. If the search engines dropped your site tomorrow, have you been building your brand elsewhere to minimize the damage?


04/11/2011 02:52 pm

Are total sales down 5% year-over-year? If so, I view that as a significant negative, considering the company grew by 24% last year. True growth did slow to 8% in the 4th quarter. If they're down 5% vs. potentially being up 10-15%, that's a drop of 15 to 20% caused by the Google penalty.

Simon Serrano

04/11/2011 02:59 pm

has anyone interviewed Paul about this yet?

sounds reasonable

04/11/2011 03:23 pm

no because Overstock has ran banner ads and lots of other 3rd party website promotions for as long as i can remember - 8 years ago comes to mind for me right now -

Michael Martinez

04/11/2011 06:27 pm

Not surprised at all. Even though JC Penney won't report their 1st qtr financial results for several weeks yet, it looks to me like their penalty had minimal impact on their revenues (probably less than 5%).

Maciej Gałecki

04/11/2011 06:38 pm

It would be interesting to see what actions Overstock.com had to take to minimize the loss of organic traffic (and sales). They were able to predict the drop in sales and could prepare themselves to reduce the loss by applying extra promotion. In the ideal world, knowing investment in this temporary promotion (and ROI) we would be able to precisely estimate the impact of Google penalty to their business...

Richard Falconer ✩

04/11/2011 11:41 pm

That sounds believable when you consider the extent of their marketing. I expect Overstock see as much non-brand traffic from Google Shopping as from natural search results. Take into account affiliates, email, brand traffic, paid search, display ads, direct traffic etc. etc. and seems more reasonable. 5% may seem low compared to mosts sites but then most sites shouldn't be compared to Overstock.

Jill Kocher

04/14/2011 11:48 am

Note that it's 5% of overall sales, not sales from organic search. If we knew what percent of Overstock's sales came from organic before the penalty, this would be far more telling. Let's say that 10% of their overall sales came from organic and now it's 5%, that's a 50% drop. A disaster for their SEO team, but it won't tank a big business that gets most of its traffic from thanks to its other channels and its big juicy brand.


05/04/2011 04:33 pm

So how is giving them a discount for a link different than making them an affiliate and getting a commission on sales from clicks on the link?

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