Overstock executives say a fall in its rankings in organic search caused more trouble than expected during the second quarter.

While Overstock.com Inc.’s revenue climbed 3% in the second quarter it had an unprofitable quarter, reporting a $7.5 million loss, the e-retailer reported this week.

In a notice to investors, executives cited trouble with several marketing programs as contributing to the loss, as well as losses from its subsidiary blockchain financial business.

In marketing, Overstock said Google’s annual refinements to its search engine algorithm that determines where pages rank in organic search impacted Overstock more than anticipated and it has taken longer than expected to recover.

“We are traditionally quite good at SEO, and even can be said to punch above our weight on that score,” CEO Patrick M. Byrne, wrote in a letter to shareholders accompanying the company’s earnings release. “As a result, a large percentage of our traffic is dependent upon Google. In May, Google began its annual algorithm adjustments, but this year the volatility introduced and the length of the tuning has been significantly greater than any previous year of which we are aware. This created tremendous headwind for our business from May through the summer thus far.”

Byrne said Overstock is taking steps to recover and expects to be “back on track” by September. Those steps include spending more on paid search and display advertising on social media platforms.

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In breaking down its Q2 sales and marketing spending, which totaled $43.3 million, a 30% increase from a year ago, the e-retailer noted it revenue derived from email marketing efforts grew less than planned. Overstock cited issues in implementing a new email marketing platform.

The company said order volume grew 2% year over year and the average order value climbed 4%. Overstock now lists 3 million products for sale.

For the quarter ended June 30, Overstock, No. 16 in the Internet Retailer Top 1000, reported:

  • $432.02 million in revenue, up 3.2% from $418.50 million a year earlier.
  • A net loss of $7.7 million compared with a loss of $1.2 million.

For the six months ended June 30, Overstock reported:

  • $864.5 million in revenue, up 3.9% from $832.2 million a year ago.
  • A net loss of $14.0 million, swinging from an $11.9 million profit.

 

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