Overstock.com 2006 Annual Report Download - page 14

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lease agreement effective as of December 29, 2006. Currently, our primary computer infrastructure remains at our original co-location
facility in Salt Lake City.
In addition to our co-location facility, we have computer facilities located at our principal corporate offices, which we use
primarily for backups, redundancy, development, and testing. As we have made the determination to consolidate facilities, including
marketing of the principal corporate office space for sub-lease, we anticipate relocating these facilities during 2007.
Competition
The online liquidation services market is new, rapidly evolving, intensely competitive and has relatively low barriers to entry, as
new competitors can launch new Websites at relatively low cost. We believe that competition in the online liquidation market is based
predominantly on:
• price;
• product quality and selection;
• shopping convenience;
• order processing and fulfillment;
• customer service; and
• brand recognition.
Our liquidation services compete with other online retailers and traditional liquidation "brokers," some of which may specifically
adopt our methods and target our customers. We currently or potentially compete with a variety of companies that can be divided into
several broad categories:
• liquidation e-tailers such as SmartBargains;
• online retailers with discount departments such as Amazon.com, Inc., eBay, Inc. and Buy.com, Inc.; and
• traditional retailers and liquidators such as Ross Stores, Inc., Walmart Stores, Inc., TJX Companies, Inc., Costco Wholesale
Corporation, Target Corporation and Best Buy Co., Inc., which may or may not also have an online presence.
As the market for online liquidation grows, we believe that companies involved in online retail, as well as traditional retailers and
liquidation brokers, will increase their efforts to develop services that compete with our online services. We also face potential
competition from Internet companies not yet focused on the liquidation market, and from retail companies both currently or not yet
operating online. We are unable to anticipate which other companies are likely to offer services in the future that will compete with
the services we provide.
In addition, many of our current and potential competitors have greater brand recognition, longer operating histories, larger
customer bases and significantly greater financial, marketing and other resources than we do, and may enter into strategic or
commercial relationships with larger, more established and well-financed companies. Some of our competitors could enter into
exclusive distribution arrangements with our vendors and deny us access to their products, devote greater resources to marketing and
promotional campaigns and devote substantially more resources to their Website and systems development than our company. New
technologies and the continued enhancement of existing technologies also may increase competitive pressures on our company. We
cannot ensure that we will be able to compete successfully against current and future competitors or address increased competitive
pressures. See Item 1A—"Risk Factors".
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