Overstock.com 2009 Annual Report Download - page 25

Table of Contents
provide for the continuation of particular pricing practices and may be terminated by either party at any time. Our current suppliers may not continue to sell
their excess inventory to us on current terms or at all and we may not be able to establish new supply relationships. For example, it is difficult for us to
maintain high levels of product quality and selection because none of the manufacturers, suppliers and liquidation wholesalers from whom we purchase
products on a purchase order by purchase order basis have a continuing obligation to provide us with merchandise at historical levels or at all. In most cases,
our relationships with our suppliers do not restrict the suppliers from selling their respective inventory to other traditional or online merchandise liquidators or
retailers, which could in turn limit the selection of products available on our Website. If we are unable to develop and maintain relationships with suppliers
that will allow us to obtain sufficient quantities of merchandise on acceptable commercial terms, such inability could harm our business, prospects, results of
operation and financial condition.
Risks associated with the suppliers from whom our products are sourced and the safety of those products could adversely affect our financial
performance.
The products we sell are sourced from a wide variety of domestic and international suppliers. Global sourcing of many of the products we sell is an
important factor in our financial performance. Our ability to find qualified suppliers who meet our standards, and to access products in a timely and efficient
manner is a significant challenge, especially with respect to suppliers located and goods sourced outside the United States. Political and economic instability
in the countries in which foreign suppliers are located, the financial instability of suppliers, suppliers' failure to meet our supplier standards, labor problems
experienced by our suppliers, the availability of raw materials to suppliers, merchandise quality issues, currency exchange rates, transport availability and
cost, transport security, inflation, and other factors relating to the suppliers and the countries in which they are located are beyond our control. In addition, the
United States' foreign trade policies, tariffs and other impositions on imported goods, trade sanctions imposed on certain countries, the limitation on the
importation of certain types of goods or of goods containing certain materials from other countries and other factors relating to foreign trade are beyond our
control. These and other factors affecting our suppliers and our access to products could adversely affect our financial performance.
Our customers count on us to provide them with safe products. Concerns regarding the safety of products that we source from our suppliers and then sell
could cause shoppers to avoid purchasing certain products from us, or to seek alternative sources of supply for all of their needs, even if the basis for the
concern is outside of our control. Any lost confidence on the part of our customers would be difficult and costly to reestablish. As such, any issue regarding
the safety of any items we sell, regardless of the cause, could adversely affect our financial performance.
We depend upon third-party delivery services to deliver products to our customers on a timely and consistent basis. Deterioration in our relationship
with any one of these third parties could decrease our ability to track shipments, cause shipment delays, and increase our shipping costs and the
number of damaged products.
We rely upon multiple third parties for the shipment of products to customers. We cannot be sure that these relationships will continue on terms we find
acceptable, or at all. Unexpected increases in shipping costs or delivery times, particularly during the holiday season, could harm our business, prospects,
financial condition and results of operations. If our relationships with these third parties are terminated or impaired or if these third parties are unable to
deliver products for us, whether through labor shortage, slow down or stoppage, deteriorating financial or business condition, responses to terrorist attacks,
natural disasters, or for any other reason, we would be required to use alternative carriers for the shipment of products to our customers. In addition,
conditions such as adverse weather or natural disasters can prevent any carriers from performing their delivery services, which can have an
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