Digital River 2002 Annual Report Download - page 11

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5
was the result of trackable promotional activity, up from 34 percent in the fourth quarter of 2001. We will continue to develop and utilize a
wide range of marketing and merchandising programs and our growing data warehouse of end-user purchasing information to aggressively grow
our clients’ businesses.
Expand International Sales. We believe that there is a significant opportunity to grow our business by expanding existing and new client sales
through international online stores. Internet adoption and e-commerce sales continue to show rapid growth in the European and Asia-Pacific
regions. We have seen significant growth in sales for those clients that have offered international stores and we intend to continue to enhance
our technology platform and services to increase sales in these regions of the world.
Leverage The Digital River Network To Provide New Distribution And Sales Opportunities For Our Clients. With our large network of clients
and products we believe we can further grow our clients’ sales by offering them more distribution and sales opportunities. We intend to expand
our offering of network services to allow our clients to distribute and sell their products through new channels and affiliates, and sell products
offered by other companies. We believe our network is unique in the marketplace and will help us to build stronger relationships with our
clients.
Provide Clients With Value-Added Services. We proactively add new service offerings, such as our backup CD and search engine submission
services, to help create new revenue streams for our clients and ourselves. We will continue to aggressively develop and offer new value-added
services to create additional sources of ongoing revenue.
Maintain Technology Leadership. We believe that our CNS has given us a competitive advantage in the market for electronic commerce
outsourcing solutions. We will continue to invest in and enhance our CNS in order to increase functionality, reliability, scalability and
performance and reduce costs. By leveraging our fixed-cost infrastructure, we will improve our ability to provide low cost, high value services
to our clients while utilizing the latest technology.
Services
We provide a broad range of services to our clients, including Web commerce development and hosting, digital delivery, integration to physical
fulfillment, transaction processing and fraud screening, customer service, merchandising services and analytical-based
e-marketing services.
Web Commerce Hosting. We provide hosted Web commerce capabilities for most of our software publisher clients and all of our online retailer
and E-Business clients. For many of these clients, this outsourcing solution is mission critical and therefore we operate data centers that perform
and scale for continuous Web commerce in a high demand environment. Our data centers feature fully redundant, high-speed connections to the
Internet, server capacity to handle rapid spikes in volume, 24x7 security and monitoring, back-up generators and dedicated power.
Our Web commerce capabilities are deployed quickly and efficiently for our clients, and can be implemented in many different ways, from
hosted electronic commerce links behind “buy buttons” through fully merchandised online stores. We match the branding and designs of our
clients to provide a seamless experience for end-users navigating from our clients’ Web sites to their stores hosted on our CNS. We fully
manage orders placed by end-users for payment processing, fraud screening and fulfillment, either digitally or physically, as well as the end-user
notifications that result from these processes. The transaction information is captured in our data warehouse and made available to our clients
via web-based analysis tools. This data warehouse is a powerful source for data analysis activities that result in highly targeted merchandising,
e-mail marketing campaigns, product offers, and test/control marketing efforts.
Digital Delivery And Physical Fulfillment Services. Digital delivery eliminates many of the costs that exist in the physical distribution chain,
such as manufacturing, packaging, shipping, warehousing and inventory carrying and handling costs. We offer clients a sophisticated array of
electronic software delivery capabilities to permit delivery of digital products to an end-user’ s computer via the Internet, as well as more
advanced OTA or “Over the Air” wireless delivery to handheld devices. Delivery is fulfilled when a copy of the digital product is made from the
master on our CNS platform and then securely downloaded to the end-user. Optionally, end users can create a CD on demand as a backup to
their digital order. Our digital distribution model not only reduces costs, thereby increasing margins available to software publishers and online
retailers, but also solves the shelf space problem constraining product availability and sales. While most software publishers use our Web
hosting services, certain software publishers use only our digital delivery services, which provides them with online distribution through our
extensive network of online retailers.