Overstock.com 2008 Annual Report Download - page 11

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Table of Contents
approximately 450,000 BMMG products (books, magazines, CDs, DVDs and video games) as of December 31, 2008. As the number
of products and product categories change throughout the year, we periodically reorganize our departments and/or categories to better
reflect our current product offerings.
Worldstock is our socially-responsible, online 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 Website, orders are fulfilled either by a third-party fulfillment partner or directly from our
warehouses in Salt Lake City, Utah. We monitor all of these sources for accurate order fulfillment and timely shipment. We currently
charge $2.95 per order for basic ground shipping, but customers can choose from various expedited shipping services at their expense.
Payment Terms
Generally, we require verification of receipt of payment, or authorization from credit card or other payment vendors whose
services we offer to our customers (such as 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 (typically 30 days).
Fulfillment for Direct Business
During 2008, we fulfilled approximately 21% of all orders through our leased warehouses in Salt Lake City, Utah (see Item 2 of
Part I, "Properties".) Our warehouse staff generally shipped between 5,000 and 8,000 orders per day, and up to 32,000 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 warehouses. Our warehouses store approximately 5,000 non-BMMG products offered on our Website. We operate the Salt
Lake City warehouses with an automated warehouse management system that tracks the receipt of inventory, distributes order-
fulfillment assignments to warehouse workers and obtains rates for various shipping options to ensure low-cost outbound shipping.
Our Website relays orders to the warehouse management system throughout each day, and the warehouse management system in turn
confirms to our Website shipment of each order. Customers can track the shipping status of their packages through links we provide
on our Website.
Fulfillment Partner Business
During 2008, approximately 79% of our orders were for inventory owned and shipped by third-party fulfillment partners. We
currently coordinate approximately 1,200 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. All orders
through our Website bear Overstock's name on the packing material and shipping documents, including those shipped by our
fulfillment partners. We also handle customer service related to all orders placed 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. As a result of this commitment, we now rank #2 in customer service rankings among all US retailers, according to rankings
published in the 2008 NRF Foundation/American Express Customer Service Survey. Our customer service staff processes
approximately 14,000 calls per week and up to approximately 30,000 calls per week during peak periods.
The same staff processes approximately 17,000 e-mail messages each week and up to approximately 21,000 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.
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