Overstock.com 2004 Annual Report Download - page 13

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Our Worldstock Website, at www.worldstock.com, is our Internet marketplace through which artisans in the United States and around the world can sell
their products and gain access to a broader market.
Fulfillment Operations
General. When customers place orders on our Websites, orders are fulfilled either by a third party fulfillment partner or directly from our warehouse in
Salt Lake City, Utah or our outsourced warehouse located in Plainfield, Indiana. We monitor all of these sources for accurate order fulfillment and timely
shipment. We currently charge $2.95 for basic ground shipping, but customers can choose from various expedited shipping services at their expense.
Payment Terms. As a general policy, we require verification of receipt of payment or credit card authorization (including verifications from Paypal and
BillMeLater) before we ship products to consumers or business purchasers. From time to time we grant credit to our business purchasers with normal credit
terms.
Fulfillment for Direct Business. During 2004, we fulfilled approximately 40% of all orders through our leased Salt Lake City, Utah warehouse or our
outsourced warehouse in Plainfield, Indiana. During 2004, the Salt Lake City warehouse team generally shipped between 10,000 and 12,000 orders per day,
and up to approximately 24,000 orders per day during peak periods, using overlapping daily shifts. We also process returns of direct and fulfillment partner
merchandise in the Salt Lake City warehouse. Our warehouses store approximately 10,000 non-BMV products offered on our Websites. We operate the Salt
Lake City warehouse with an automated warehouse management system that tracks the receipt of the inventory items, distributes order-fulfillment
assignments to warehouse workers and obtains rates for various shipping options to ensure low-cost outbound shipping. Our Websites relay orders to the
warehouse management system throughout each day, and the warehouse management system in turn confirms to our Websites shipment of each order.
Customers track the shipping status of their packages through links we provide on our Websites. During 2004, we advertised a standard of shipping most of
our orders within two business days of order placement, subject to certain exceptions.
Fulfillment Partner Business. During 2004 approximately 60% of our orders were for inventory owned and shipped by third party fulfillment partners.
We currently manage approximately 380 entities that collect their orders through our Websites. These third parties perform essentially the same operations as
our warehouse: order picking and shipping; however, beginning July 1, 2003, we began handling returns for these sales. These third parties relay shipment
confirmations to our Websites, where customers can review shipping and tracking information. From a customer's point of view, shipping from our
warehouses or from the warehouse of one of these third parties is indistinguishable.
Customer Service
We are committed to superior customer service. We staff our customer service department with dedicated in-house and outsourced professionals who
respond to phone and e-mail inquiries on products, ordering, shipping status, and returns. Our customer service staff processes approximately 20,000 to
25,000 calls per week. The same staff processes approximately 20,000 to 40,000 e-mail messages each week, with less than a 24-hour turnaround time. We
use automated e-mail and phone systems to route traffic to appropriate customer service representatives. The demands on our customer service staff increase
significantly during peak periods, including the several weeks before and after Christmas.
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