Overstock.com 2007 Annual Report Download - page 8

The Overstock Solution
Overstock provides manufacturers with a one-stop liquidation channel to sell both large and small quantities of excess and closeout inventory without
disrupting sales through traditional channels. Key advantages for manufacturers liquidating their excess inventory through Overstock include:
Resolution of channel conflict. Channel conflicts arise when a manufacturer's excess inventory is sold through the same channel as their full-
priced product offerings. Since excess inventory is usually sold at a discount, sales of the manufacturer's full-priced product offerings may be
impacted as a consumer in a retail store may opt for the excess product or become confused by the pricing and model discrepancies. By using
Overstock, manufacturers have an alternative and independent channel where they can sell excess inventory without the fear of hindering the sale
of their full-priced products.
Single point of distribution. Manufacturers often use multiple liquidation sources to clear their excess inventory. Multiple sources create
additional logistics issues that they would rather avoid. By using Overstock, manufacturers have a single source for the distribution of excess
inventory.
Improved control of distribution. By using Overstock, manufacturers can monitor what kind of customer, whether individual consumer or small
retailer, ultimately purchases their merchandise. In addition, a manufacturer can request that its products be offered in only one of our sales
channels in order to avoid sales channel pollution.
Improved transaction experience. By having a reliable inventory clearing channel, manufacturers are able to more quickly and easily dispense of
their excess merchandise, raw materials or production capacity.
Overstock also offers consumers a compelling alternative for bargain shopping. Key advantages for consumers include:
High quality and broad product selection. Much of the merchandise offered on our Website is from well-known, brand-name manufacturers. In
the Shopping section of our Website, we currently have approximately 63,000 non-BMMG products and almost 724,000 BMMG products
(books, magazines, CDs, DVDs, video cassettes and video games) in eight major departments.
Convenient access on a secure site. Our customers are able to access and purchase our products 24 hours a day from the convenience of their
computer. We do not sell any personal information about our customer base to third parties.
Responsive customer service and positive shopping experience. Our team of customer service representatives assists customers by telephone,
instant online chat and e-mail. Our customer service staff answers approximately 85% of phone calls within 30 seconds, and responds to
approximately 98% of e-mail messages within one business day. For our consumer business, we include a return shipment label in our customer's
shipment to facilitate product returns and, subject to certain conditions, we allow customers to return most purchased merchandise for a refund.
In addition, we continually update and monitor our Website to enhance the shopping experience for our customers.
Our objective is to become the dominant Internet-based closeout solution for holders of brand-name merchandise, allowing them to dispose of that
merchandise discreetly and with high recovery values, and to ultimately become a one-stop Internet-based discount shopping destination. We are pursuing this
objective through the following key strategies:
Establish strong relationships with manufacturers and distributors. With the growth in the scale of our operations, we believe we are becoming
an efficient liquidation channel for manufacturers and distributors. With scale comes the ability to buy in volume, and we believe manufacturers
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