Overstock.com 2004 Annual Report Download - page 21

Download and view the complete annual report

Please find page 21 of the 2004 Overstock.com annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 114

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114

We may expand our international business, causing our business to become increasingly susceptible to numerous international business risks and
challenges that could affect our profitability.
We have begun to expand into international markets, and in the future we may do so 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 laws and regulations to the extent applicable;
unexpected changes in international regulatory requirements and tariffs;
difficulties in staffing and managing foreign operations;
longer payment cycles from credit card companies;
greater difficulty in accounts receivable collection;
potential adverse tax consequences;
price controls or other restrictions on foreign currency; and
difficulties in obtaining export and import licenses.
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 United States dollars may contribute to fluctuations in our results of
operations and fluctuating exchange rates could cause reduced gross revenues and/or gross margins from non-dollar-denominated international sales.
In order to obtain future revenue growth and achieve and sustain profitability we will have to attract customers on cost-effective terms.
Our success depends on our ability to attract customers on cost-effective terms. We have relationships with online services, search engines, directories
and other Websites and e-commerce businesses to provide content, advertising banners and other links that direct customers to our Websites. We rely on these
relationships as significant sources of traffic to our Websites 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. 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
agreements or similar 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 assure you 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.
Without these relationships, our revenues, business, prospects, financial condition and results of operations could suffer.
17
•
•
•
•
•
•
•
•
•