Overstock.com 2009 Annual Report Download - page 30

Table of Contents
We may not be able to compete successfully against existing or future competitors.
The online liquidation services market is rapidly evolving and intensely competitive. Barriers to entry are minimal, and current and new competitors can
launch new websites at a relatively low cost. We currently compete with numerous competitors, including:
liquidation e-tailers such as SmartBargains;
online retailers with discount departments such as Amazon.com, Inc., eBay, Inc. and Buy.com, Inc.; and
online specialty retailers such as BlueNile and BackCountry; and
traditional retailers and liquidators such as Ross Stores, Inc., Wal-Mart Stores, Inc., TJX Companies, Inc., Costco Wholesale Corporation, J.C.
Penny Company, Inc., Sears Holding Corporation, Target Corporation, Best Buy Co., Inc., and Barnes and Noble, Inc., most of which also have
an online presence.
We compete with liquidation "brokers" and retailers and online marketplaces such as eBay, Inc.
We expect the online liquidation services market to become even more competitive as traditional liquidators and online retailers continue to develop
services that compete with our services. In addition, manufacturers and retailers may decide to create their own websites to sell their own excess inventory
and the excess inventory of third parties. Competitive pressures created by any one of our competitors, or by our competitors collectively, could harm our
business, prospects, financial condition and results of operations.
Further, as a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service or marketing
decisions or acquisitions that could harm our business, prospects, financial condition and results of operations. For example, to the extent that we enter new
lines of businesses such as third-party logistics, or discount brick and mortar retail, we would be competing with large established businesses such as APL
Logistics, and Ltd., Ross Stores, Inc., respectively. In the past we have entered the online auctions, car listing and real estate listing businesses in which we
compete with large established businesses including eBay, Inc., AutoTrader.com, Inc. and Realtor.com.
Many of our current and potential competitors described above have longer operating histories, larger customer bases, greater brand recognition and
significantly greater financial, marketing and other resources than we do. In addition, online retailers and liquidation e-tailers may be acquired by, receive
investments from or enter into other commercial relationships with larger, well-established and well-financed companies. Some of our competitors may be
able to secure merchandise from manufacturers on more favorable terms, devote greater resources to marketing and promotional campaigns, adopt more
aggressive pricing or inventory availability policies and devote substantially more resources to website and systems development than we do. Increased
competition may result in reduced operating margins, loss of market share and a diminished brand franchise. We cannot provide assurance that we will be
able to compete successfully against current or future competitors.
Our operating results depend on our Website, network infrastructure and transaction-processing systems. Capacity constraints or system failures
would harm our business, prospects, results of operations and financial condition.
Any system interruptions that result in the unavailability of our Website or reduced performance of our transaction systems would reduce our transaction
volume and the attractiveness of the services that we provide to suppliers and third parties and would harm our business, prospects, operating results and
financial condition.
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