Overstock.com 2010 Annual Report Download - page 23

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Table of Contents
generate satisfactory revenues from such expanded services or products to offset their cost could harm our business, prospects, financial condition and results
of operations.
We are expanding our international business, causing our business to become increasingly susceptible to numerous international business risks and
challenges that could affect our profitability.
We sell products in international markets, and in the future we may expand into these markets more aggressively. International sales and transactions are
subject to inherent risks and challenges that could adversely affect our profitability, including:
the need to develop new supplier and manufacturer relationships;
the need to comply with additional U.S. and foreign laws and regulations to the extent applicable, including but not limited to, restrictions on
advertising practices, regulations governing online services, restrictions on importation of specified or proscribed items, importation quotas,
consumer protection laws, enforcement of intellectual property rights, laws dealing with consumer and data protection, privacy, encryption, and
restrictions on pricing or discounts;
unexpected changes in international regulatory requirements, taxes and tariffs; and
geopolitical events such as war and terrorist attacks.
To the extent we generate international sales and transactions in the future, any negative impact on our international operations could negatively impact
our business. In particular, gains and losses on the conversion of foreign payments into U. S. dollars may contribute to fluctuations in our results of operations
and fluctuating exchange rates could cause reduced gross revenues and/or gross profit percentages from non-dollar-denominated international sales.
Additionally, penalties for non-compliance with laws applicable to international business and trade, such as the U.S. Foreign Corrupt Practices Act, could
negatively impact our business.
In order to obtain future revenue growth and achieve and sustain profitability, we will have to attract and retain customers on cost-effective terms.
Our success depends on our ability to attract and retain customers on cost-effective terms. We have relationships with online services, search engines,
affiliate marketing websites, directories and other website and e-commerce businesses to provide content, advertising banners and other links that direct
customers to our Website. We rely on these relationships as significant sources of traffic to our Website and to generate new customers. If we are unable to
develop or maintain these relationships on acceptable terms, our ability to attract new customers and our financial condition could be harmed. If the
underlying technology's development evolves in a manner that is no longer beneficial to us our financial condition could be harmed. In addition, certain of our
online marketing agreements may require us to pay upfront fees and make other payments prior to the realization of the sales, if any, associated with those
payments. Accordingly, if these relationships or agreements that we may enter into in the future fail to produce the sales that we anticipate, our results of
operations will be adversely affected. We cannot give any assurance that we will be able to increase our revenues, if at all, in a cost-effective manner. We
periodically conduct national television and radio branding and advertising campaigns. Such campaigns are expensive and may not result in the cost-effective
acquisition of customers.
Further, many of the parties with which we may have online-advertising arrangements could provide advertising services for other online or traditional
retailers and merchandise liquidators. As a result, these parties may be reluctant to enter into or maintain relationships with us. Failure to achieve sufficient
traffic or generate sufficient revenue from purchases originating from third parties may result in termination of these relationships by these third parties.
Further, in the past we have terminated our
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