Overstock said that it’s still adjusting to changes Google made to its search engine algorithms, which reduced the online retailer’s ranking in some search results during some periods. As a result, the company has had to emphasize other marketing channels, such as sponsored search.
Although sponsored search has generated revenue growth for the company, Overstock said that the move also incurs higher associated marketing expenses as a percentage of revenue than it had to pay prior to Google making its changes.
Still, Overstock reported total net revenue for the fourth quarter of $397.6 million, a 16% increase from $342 million in the prior-year quarter. The growth in net revenue was primarily due to an increase of 13% in average order size, from $132 to $149, coupled with a 3% increase in orders. The increases in average order size are largely due to a sales mix shift into home and garden products.
The company’s net income in the fourth quarter was $73.6 million, an increase of $64.8 million from $8.8 million for the prior-year quarter.