Overstock.com 2007 Annual Report Download - page 14

Fulfillment Partner Business. During 2007, approximately 75% of our orders were for inventory owned and shipped by third-party fulfillment partners.
We currently manage approximately 730 entities that collect orders through our Website. These third parties perform essentially the same operations as our
warehouse: order picking and shipping; however, we handle the majority of the returns for these sales. These third parties relay shipment confirmations to our
Website where customers can review shipping and tracking information. From a customer's point of view, all orders through our Website are being shipped by
Overstock, including those shipped by our fulfillment partners. We also handle customer service related to all orders through our Website.
Sales and Marketing
We use a variety of methods to target our consumer audience, including online campaigns, such as advertising through portals, keywords, search engines,
affiliate marketing programs, banners, e-mail and direct mail campaigns, and we are able to monitor and evaluate their results. We seek to identify and
eliminate campaigns that do not meet our expectations. We also do brand advertising through television, radio, and print ads. We generally develop these
campaigns internally and believe that doing so is cost-effective.
Customer Service
We are committed to providing superior customer service. We staff our customer service department with dedicated in-house and outsourced
professionals who respond to phone, instant online chat and e-mail inquiries on products, ordering, shipping status, and returns. Our customer service staff
processes approximately 15,000 calls per week and up to approximately 42,000 calls per week during peak periods.
The same staff processes approximately 15,000 e-mail messages each week and up to approximately 30,000 e-mail messages per week during peak
periods, with a turnaround goal of one business day. 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 the
Christmas holiday.
Technology
We use our internally developed Website and a combination of proprietary technologies and commercially available licensed technologies and solutions
to support our operations. We use the services of XO Communications, Inc., Qwest Communications International, Inc. and Verizon, Inc. to obtain
connectivity to the Internet over multiple Gig-E and OC48 links. We currently store our data on several Oracle 10g database clusters using Dell and IBM
computer hardware connected to multiple large scale EMCs for data storage. Currently, we use Dell and IBM servers for our Website, which are connected to
the Oracle database and operate in a multi-processing Linux environment designed to accommodate large volumes of Internet traffic. During 2004 we moved
our primary computer infrastructure to a co-location facility in Salt Lake City.
In July 2005, we entered into a Colocation Center Agreement (the "Colocation Agreement") to build out and lease 11,289 square feet of space at Old
Mill Corporate Center II in Salt Lake City for a data center and co-location facility. In November 2006, we made a determination to consolidate our facilities
and began negotiations to terminate the lease of the new co-location facility (see Item 15 of Part IV—"Financial Statements"—Note 3 "Restructuring
Expense"), and on February 1, 2007, we terminated the 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 December 2006, we entered into a Data Center Agreement (the "OM I Agreement") for an IT
data center which we use primarily for backups, redundancy, development, testing, and our corporate systems infrastructure.
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