Overstock's Google Problem: Link Attack Or Shopping Hack?

It's easy to forget that E-tailing can get much messier than you want it to be. Case in point: Overstock.com, which on February 22 got slapped down in Google's search results for apparently using link farms to boost its Google ranking. That came just two weeks after JCPenney suffered the same fate. But Overstock's problem may actually be due to an online retail portal in Singapore that just got a little too enthusiastic for Google's tastes.

According to a statement from Overstock CEO Patrick Byrne, one reason Google suspected Overstock of link farming was the E-tailer's program that offered discounts to university faculty and students. It turns out Google trusts .edu links more than others, and that program raised red flags. But a much bigger problem was probably Tarazz, the Singaporean Web site that created a mirror of Overstock's own site—complete with 3.5 million links to Overstock.

"Overstock has already sent two cease-and-desist letters to Tarazz," Byrne wrote. "We have no relationship with Tarazz. It is not out of the question that this is an attempt to sabotage our search rankings by someone with an interest in doing so."

Well, maybe. If it really is sabotage, it's also happening to Amazon, Foot Locker, Ralph Lauren, Ann Klein, Victoria's Secret, Gap and 20 other retailers linked to by Tarazz's site. What's more likely is that Tarazz has come up with a clever approach to cross-border E-Commerce. The site offers customers in Singapore the chance to shop at U.S. online retailers, then pay Tarazz in Singapore dollars at prices that include shipping and import fees.

Right now, the Tarazz shopping portal works by opening up a U.S. retailer's site in one window, with a sidebar window into which customers can copy product numbers, clothing sizes and other ordering information. But if what Overstock claims is true, that's a new development. Until recently, Tarazz apparently linked directly to every product on any retailer's site that it mirrored.Either way, it's an ingenious way of hacking the Web to squeeze out a little more business—and Tarazz, as middle man, can grab a piece of every sale it helps produce.

No wonder Google wasn't happy. To Google's analytics, Tarazz looked exactly like a giant link farm. The problem is that Tarazz wasn't selling links. It was just an online middle man of the sort Google wasn't designed to handle well.

What's probably most frustrating about Tarazz is that it's a genuinely clever idea for dealing with a real problem. When it comes to retail, the World Wide Web involves a very fragmented world. Cross-border retail is a pain at best for retailers. For customers, it's miserable. Even when a retailer offers an E-Commerce site aimed at a particular foreign country, the retailer may still not let customers pay in local currency. And that's assuming the retailer is willing to handle the complications of cross-border tariffs and shipping.

Compare that with Tarazz, which handles currency changes, import requirements and all the dirty details. For customers, it's much simpler and probably only a little more expensive. For U.S. retailers, it's most likely an annoyance at worst—retailers are getting business from a Web portal on the other side of the world that might be misusing the retailer's trademarks and copyrights but is beyond convenient legal reach. Everybody wins—or at least comes out a bit ahead.

Enter Google—and suddenly Tarazz goes from minor annoyance to major pain point for Overstock.

The millions of links appear to be gone now. Maybe Overstock's cease-and-desist letters had the desired effect, and scared the portal into changing how it worked. Or maybe Tarazz just figured that if it annoys too many major retailers, it'll be out of business.

But the problem Tarazz is trying to solve is still there. Big retailers have a hard time handling a relatively small number of customers on the other side of the world. The Internet, which is supposed to be able to connect any seller with any buyer, doesn't do a very good job on its own.

As long as that's true, middle men like Tarazz will keep popping up to take up the slack—assuming Google doesn't beat up every retailer that gets caught in the middle.