Juno 2012 Annual Report Download - page 40

Table of Contents
Additionally, in accordance with current industry practice by international floral and gift direct marketers and our interpretation of applicable law,
we collect and remit value added taxes on certain consumer orders placed through Interflora. Future changes in the operation of our business could
result in the imposition of additional tax obligations. Moreover, if a foreign taxing authority successfully challenges our current practice or implements
new legislative initiatives, we could incur substantial tax liabilities for past sales and lose future sales as a result of the increased tax costs that would be
borne by the customer. The imposition of additional tax liabilities for past or future sales could decrease our ability to compete with traditional retailers
and reduce our sales, which could have a material adverse effect on our business, financial condition, results of operations, and cash flow.


 
We utilize and rely on a significant number of outsourced staff and temporary employees in addition to our permanent employees, to take orders
and respond to customer inquiries. These outsourced staff and temporary employees may not have the same level of commitment to our customers or be
as well trained as our permanent employees. In addition, we may not hire enough outsourced staff or temporary employees to adequately handle the
increased volume of telephone calls we receive during peak periods. If our customers are dissatisfied with the quality of the customer service they
receive, they may not place orders with us again, which could have a material adverse effect on our business, financial condition, results of operations,
and cash flows.


As consumers continue to spend more time and money online, the competition for their time and engagement has continued to intensify.
Consumers have a great number of options for online content and entertainment, including, by way of example, games, websites offering news and
current events, movies, television shows, videos, information about any and virtually every topic, and the opportunity to communicate, socialize and
interact with acquaintances and others. Certain aspects of the value proposition of our online nostalgia services compete with major social networking
websites such as Facebook and Google+, as well as Internet search engines such as Google. Many of our competitors offer their content and services
free of charge.
The market for online loyalty marketing services is highly competitive, and we expect competition to significantly increase in the future as loyalty
marketing programs continue to grow in popularity. Our MyPoints online loyalty marketing service faces competition for members from other online
loyalty marketing programs, such as Ebates, as well as offline loyalty marketing programs that have a significant online presence, such as those operated
by credit card, airline and hotel companies. In addition, we also face competition for members from online providers of discounted offerings and
coupons, such as Groupon and LivingSocial.
Some of our competitors have longer operating histories, greater name and brand recognition, larger user bases, significantly greater financial,
technical, sales, and marketing resources, and engage in more extensive research and development than we do. Some of our competitors also have lower
customer acquisition costs than we do, offer a wider variety of services, have more compelling websites with more extensive user-generated or third-
party content or offer their services or content free to their users. Some of our competitors have been more successful than we have been in attracting
and retaining visitors and members, and our ability to attract visitors to our websites and maintain a large
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