Overstock.com 2010 Annual Report Download - page 24

Table of Contents
relationships with third party Internet advertising affiliates in certain states as a result of efforts by those states to require us to collect sales taxes based on the
presence of those third party Internet advertising affiliates in those states, and we are likely do so again in the future if necessary. Without these relationships,
our business, prospects, financial condition and results of operations could suffer.
We rely upon paid and natural search engines like Google, Bing, and Yahoo to rank our product offerings and may at times be subject to changes in
search algorithms and ranking penalties if they believe we are not in compliance with their guidelines.
We rely on paid and natural search engines to attract consumer interest in our product offerings. Potential and existing customers use search engines
provided by search engine companies, including Google, Bing, and Yahoo, which use algorithms and other devices to provide users a natural ranked listing of
relevant Internet sites matching a user's search criteria and specifications. Generally, Internet sites ranked higher in the paid and natural search results lists
furnished to users attract the largest visitor share among similar Internet sites. Among retail internet sites, those sites achieving the highest natural search
ranking often benefit from increased sales. Natural search engine algorithms utilize information available throughout the Internet, including information
available on our site. Rules and guidelines of these natural search engine companies govern our participation on their sites and how we share relevant Internet
information that may be considered or incorporated into the algorithms utilized by these sites. If we fail to present, or improperly present, our site information
for use by natural search engine companies, or if any of these natural search engine companies determine we have violated their rules or guidelines, or if
others improperly present our site information to these search engine companies, or if natural search engine companies make changes to their search
algorithms, we may fail to achieve an optimum ranking in natural search engine listing results, or we may be penalized in a way that could harm our business,
prospects, financial condition and results of operations.
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.;
private sale sites such as Rue La La, Gilt Groupe;
online specialty retailers such as Bluefly, Inc., Blue Nile, Inc. and Backcountry.com; 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., all of which also have an
online presence.
We also 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.
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