Enom 2015 Annual Report Download - page 16

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x shipping disruptions or delays with the products sold through our marketplaces;
x the return rate for products sold through our marketplaces;
x the overall growth rate of e-commerce and marketplaces;
x overall changes in consumer spending on discretionary purchases; and
x legal claims, including copyright and trademark infringement claims, right of publicity claims and product
liability claims, which may expose us to greater litigation costs in the future as compared to historical levels.
One of the key factors to grow our marketplaces business is expanding our customer base. Our ability to attract
new customers, some of whom may already purchase similar products from our competitors, depends in part on our
ability to successfully drive traffic to our marketplaces using social media sites, e-mail marketing campaigns, paid
referrals and search. We may incur significant expenses related to customer acquisition and the net sales from new
customers may not ultimately exceed the cost of acquiring these customers. Additionally, we believe that many of the
new customers for our marketplaces originate from word-of-mouth and other non-paid referrals from existing customers.
If we fail to deliver a differentiated shopping experience or if customers do not perceive the products sold through our
marketplaces to be of high value and quality, we may have difficulty retaining our existing customers and attracting new
customers through referrals.
If we are unable to successfully grow our marketplaces, including as a result of lower customer growth or retention
than expected, or if the revenue generated from initiatives related to our marketplaces is less than the costs of such
initiatives, our business, financial condition and results of operations could be materially and adversely affected.
If the mobile solutions available to buyers and sellers using our marketplaces are not effective, the growth prospects
of our marketplaces could decline and our business could be adversely affected.
Consumers are increasingly conducting online shopping on mobile devices, including smartphones and tablets,
rather than on desktop computers. Although we have recently introduced mobile applications for Society6 and Saatchi
Art and we continue to focus on improving the mobile experience for buyers and sellers using our marketplaces, the
smaller screen size and reduced functionality associated with some mobile device interfaces may make the use of our
marketplace platforms more difficult or less appealing to our members, and visits to our marketplaces on mobile devices
have not converted into purchases as often as visits made through desktop computers. Society6 and Saatchi Art sellers
are also increasingly using mobile devices to operate and monitor their businesses on our platforms and if we are not
able to deliver a rewarding experience to sellers using mobile devices, our marketplace businesses may suffer.
Additionally, our recently launched mobile apps may not result in sufficient increased revenue to justify the expenses of
developing and maintaining them, and we may encounter problems with operating the mobile apps in the future. If our
members encounter difficulty accessing or using our marketplace platforms on their mobile devices, or if our members
choose not to use our marketplace platforms on their mobile devices, our growth prospects and our business may be
adversely affected.
We face significant competition, which we expect will continue to intensify, and we may not be able to maintain or
improve our competitive position or market share.
We operate in highly competitive and still developing markets. The industries in which we compete are
characterized by rapid technological change, various business models and frequent disruption of incumbents by
innovative entrants. There can be no assurance that we will be able to compete successfully against current or future
competitors and a failure to increase, or the loss of, market share, would likely seriously harm our business, financial
condition and results of operations.