Overstock.com 2009 Annual Report Download - page 60

Table of Contents
net basis. The revenue for the merchandise returned to the Company that we sell at auction is recorded on a gross basis. Revenue from the auctions business
has been included in the fulfillment partner segment.
We provide an online site for listing cars for sale as a part of our Website. The cars listing service allows dealers to list vehicles for sale and allows
buyers to review vehicle descriptions, post offers to purchase, and provides the means for purchasers to contact sellers for further information and negotiations
on the purchase of an advertised vehicle. Revenue from the cars listing business is recorded net and is included in the fulfillment partner segment.
We provide an online site for listing real estate for sale as a part of our Website. The real estate listing service allows customers to search active listings
across the country. Listing categories include foreclosures, live and on-line auctions, for sale by owner listings, broker/agent listings and numerous aggregated
classified ad listings. Revenue from the real estate listing business is recorded net and is included in the fulfillment partner segment.
We began selling products through our Website to customers outside the United States in August 2008. As of December 31, 2009, we were selling to
customers in 58 countries. We do not have operations outside the United States, and are using a U.S. based third party to provide logistics and fulfillment for
all international orders. Revenue generated from the international business is included in either direct or fulfillment partner revenue, depending on whether the
product is shipped from our leased warehouses or from a fulfillment partner.
Sales returns allowance
We inspect all returned items when they arrive at our processing facility. We will refund the full cost of the merchandise returned and all original
shipping charges if the returned item is defective or we have made an error, such as shipping the wrong product.
If the return is not a result of a product defect or our error and our customer initiates a return of an unopened item within 30 days of delivery, except for
computers and electronics, we will refund the full cost of the merchandise minus the original shipping charge and actual return shipping fees. However, we
will reduce refunds for returns initiated more than 30 days after delivery or that are received at our returns processing facility more than 45 days after initial
delivery.
If our customer returns an item that has been opened or shows signs of wear, we will issue a partial refund minus both the original shipping charge and
return shipping fees.
Total net revenue is recorded net of estimated returns. We maintain an allowance for returns based on current period revenues and historical returns
experience. Management analyzes actual historical returns, current economic trends and changes in order volume and acceptance of its products when
evaluating the adequacy of the sales returns allowance in any accounting period. Our actual product returns have not differed materially from our estimates.
We are not currently aware of any trends that would significantly change future returns experience compared to historical experience. The allowance for
returns was $16.2 million and $11.9 million at December 31, 2008, and 2009, respectively.
Credit card chargeback allowance
Revenue is recorded net of credit card chargebacks. We maintain an allowance for credit card chargebacks based on current period revenues and
historical chargeback experience. The allowance for chargebacks was $365,000 and $139,000 at December 31, 2008 and 2009, respectively.
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