Overstock.com, Inc. (OSTK)

falcon2382 (98.47) Submitted: 4/29/08 1:13 PM : Start Price: $19.75 OSTK Score: -10.02

At one point in time about 3 years ago I had a lot of faith in overstock.com. They basically took ebay's REAL current model (not the fake auction site that it pretends to still be) and was just upfront with it--ultimately most of the people who sell things on ebay are simply wholesalers or "retailers" acting as a middle man between a wholesaler, but not even touching the merchandise.

I had two experiences with overstock, neither was horrible, but neither was really all that great either. What I mean by that is that the merchandise I bought ultimately was what was advertised, but I had to go back and check to make sure when I received it. I was kind of dissapointed and I couldn't quite put my finger on why. Then I realized how much hype plays into their business model. All over their site is "80% off" this and "67.34% off" that--but what is that percentage based off of? I found other websites with a much better name advertising the exact same product for "20% off" but--hey, look at that: after free shipping the bottom line price is exactly the same is what I paid on overstock.com.

In the end, when people feel like they were duped, they are not going to go back. Of course, personal experience isn't the only way a company's market share can become mired in red, when it comes to consumers, people trust the stories of their friends and loved ones. I know I told my mother and my two brothers not to bother with overstock after my experience and i just found out today she has told some of her friends. Hence why I am writing this pitch today. I took a glance at the stock and noticed its at the top of a hill in a bear market with HUGE resistance above it--none below--and in my ears I keep hearing my mother say to her friend Susan, "Oh that company isn't very good. A few years ago Michael got ripped off when he bought a camera from them and Elaine from down the street told me she had to fight with management to get her money back on an item that she hadn't even opened."

Now whether mom had Elaine's story perfectly correct is besides the point in my opinion--and I didn't, in fact, "get ripped off" it just felt like I did. And that's the point: a business model that breeds negative customer sentiment does not bode well for any company, but certainly not a .COM that sells mainly discretionary items in the wee hours of what I believe will be a steep recession. Of course, the ongoing litigations that the company is undergoing in relation to fraud probably won't help its reputation or cash reserves either....

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