Overstock.com 2011 Annual Report Download - page 11
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Table of Contents
second data center near our corporate headquarters which we use primarily for backups, redundancy, development, testing, and our corporate systems
infrastructure.
Competition
Internet retail is intensely competitive and has relatively low barriers to entry. We believe that competition in this industry is based predominantly on:
price;
product quality and selection;
shopping convenience;
website organization and load speed;
order processing and fulfillment;
order delivery time;
customer service; and
brand recognition.
We compete with other online retailers, traditional retailers and liquidation "brokers," some of which may specifically adopt our methods and target our
customers. We currently or potentially compete with a variety of companies that can be divided into several broad categories:
liquidation e-tailers such as SmartBargains;
online general retailers with discount departments such as Amazon.com, Inc., eBay, Inc. and Buy.com, Inc.;
private sale sites such as Rue La La and Gilt Groupe;
online specialty retailers such as Bluefly, Inc., Blue Nile, Inc. and Zappos.com; and
traditional general merchandise and specialty retailers and liquidators such as Ross Stores, Inc., Wal-Mart Stores, Inc., Costco Wholesale
Corporation, J.C. Penney Company, Inc., Sears Holding Corporation, Target Corporation, Best Buy Co., Inc., Home Depot, Inc. and Barnes and
Noble, Inc., which also have an online presence.
Many of our current and potential competitors have greater brand recognition, longer operating histories, larger customer bases and significantly greater
financial, marketing and other resources than we do. Further, any of them may enter into strategic or commercial relationships with larger, more established
and well-financed companies, including exclusive distribution arrangements with our vendors that could deny us access to their products. Many of them could
devote greater resources to marketing and promotional campaigns and devote substantially more resources to their website and systems development than we
do. New technologies and the continued enhancement of existing technologies also may increase competitive pressures on us. We cannot ensure that we will
be able to compete successfully against current and future competitors or address increased competitive pressures (see Item 1A—"Risk Factors").
Seasonality
Our business is affected by seasonality because of the holiday retail reason, which historically has resulted in higher sales volume during our fourth
quarter, which ends December 31. We recognized 29.8%, 32.0% and 36.8% of our annual revenue during the fourth quarter of 2011, 2010, and 2009,
respectively.
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