Overstock.com 2012 Annual Report Download - page 47

Table of Contents
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At December 31, 2012, we were offering products to customers in over 100 countries and non-U.S. territories. We do not have sales operations
outside the United States, and are using a U.S.-based third party to provide logistics and fulfillment for all international orders. Revenue generated from
our international business is included in either direct or fulfillment partner revenue, depending on whether the product is shipped from our warehouses
or from a fulfillment partner. Less than 1% of our 2012, 2011 and 2010 revenues were from international customers.
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During 2012, we also began offering some of our products for sale in on-line marketplaces of other Internet retailers' websites, which allows us to
reach a broader potential customer base. Under the terms of our agreements with these ecommerce marketplace retailers, the retailers typically earn a fee
that is a percentage of the selling price of the orders they send us. Revenue generated from these ecommerce marketplace channels is included in either
direct or fulfillment partner revenue, on a gross basis, depending on whether the product is shipped from our warehouses or from a fulfillment partner.
Ecommerce marketplace channels were approximately 1% of our 2012 total net revenues.
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We operate an online site for listing cars for sale as a part of our Website. The cars listing service allows dealers to list vehicles for sale and allows
buyers to review vehicle descriptions and post offers to purchase, and provides the means for prospective purchasers to contact sellers for further
information and negotiations on the purchase of an advertised vehicle. Revenue from the cars listing business is included in the fulfillment partner
segment on a net basis. Revenue from our other businesses is less than 1% of total net revenues.
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We have a customer loyalty program called Club O for which we sell annual memberships. We record membership fees as deferred revenue and
we recognize revenue ratably over the membership period. The Club O loyalty program allows members to earn reward dollars for qualifying purchases
made on our Website. We also have a co-branded credit card program (see "Co-branded credit card revenue" below for more information). Co-branded
cardholders are also Club O members and earn additional reward dollars for purchases made on our Website, and from other merchants. Reward dollars
earned may be redeemed on future purchases made through our Website. Club O reward dollars expire 90 days after the customer's Club O membership
expires. We account for these transactions as multiple element arrangements and allocate revenue to the elements using their relative fair values. We
include the value of reward dollars earned in deferred revenue and we record it as a reduction of revenue at the time the reward dollars are earned.
We recognize revenue for Club O reward dollars when customers redeem their reward dollars as part of a purchase at our Website. We recognize
other income when Club O reward dollars expire or the likelihood of reward dollars being redeemed by a customer is remote ("reward dollar
breakage"). Due to the loyalty program's short history, currently no reward dollar breakage is recognized until the reward dollars expire. However, in
the future we plan to recognize such breakage based upon historical redemption patterns.
In instances where customers receive free Club O reward dollars not associated with any purchases, we account for these transactions as sales
incentives such as coupons and record a reduction of revenue at the time the reward dollars are redeemed.
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