Amazon.com 2002 Annual Report Download - page 20

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interruptions, we continually need to add additional software and hardware and upgrade our systems and
network infrastructure to accommodate both increased traÇc on our Web sites and increased sales volume.
Our computer and communications systems and operations could be damaged or interrupted by Ñre,
Öood, power loss, telecommunications failure, break-ins, earthquakes, acts of war or terrorism, acts of God,
computer viruses, physical or electronic break-ins and similar events or disruptions. Any of these events
could cause system interruption, delays and loss of critical data, and could prevent us from accepting and
fulÑlling customer orders. Should this occur, it would make our product oÅerings less attractive to our
customers and our service oÅerings less attractive to third parties. While we do have backup systems for
certain aspects of our operations, our systems are not fully redundant and our disaster recovery planning
may not be suÇcient for all eventualities. In addition, we may have inadequate insurance coverage or
insurance limits to compensate us for losses from a major interruption. If any of this were to occur, it
could damage our reputation and be expensive to remedy.
We May Not Be Successful in Our EÅorts to Expand into International Market Segments
We plan, over time, to continue to expand our reach in international market segments. We have
relatively little experience in purchasing, marketing and distributing products or services for these market
segments and may not beneÑt from any Ñrst-to-market advantages. It is costly to establish international
facilities and operations, promote our brand internationally and develop localized Web sites, stores and
other systems. We may not succeed in these eÅorts. Our net sales from international market segments may
not oÅset the expense of establishing and maintaining the related operations and, therefore, these
operations may not be proÑtable on a sustained basis.
Our international sales and related operations are subject to a number of risks inherent in selling
abroad, including, but not limited to, risks with respect to:
‚ foreign exchange rate Öuctuations;
‚ local economic and political conditions;
‚ restrictive governmental actions (such as trade protection measures, including export duties and
quotas and custom duties and tariÅs);
‚ import or export licensing requirements;
‚ limitations on the repatriation of funds;
‚ diÇculty in obtaining distribution and support;
‚ nationalization;
‚ longer receivable cycles;
‚ consumer protection laws and restrictions on pricing or discounts;
‚ lower level of adoption or use of the Internet and other technologies vital to our business and the
lack of appropriate infrastructure to support widespread Internet usage;
‚ lower level of credit card usage and increased payment risk;
‚ diÇculty in developing and simultaneously managing a larger number of unique foreign operations
as a result of distance, language and cultural diÅerences;
‚ laws and policies of the U.S. and other jurisdictions aÅecting trade, foreign investment and loans;
‚ tax and other laws of the U.S. and other jurisdictions; and
‚ geopolitical events, including war and terrorism.
As the international e-commerce channel continues to grow, competition will likely intensify. Local
companies may have a substantial competitive advantage because of their greater understanding of, and
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