Overstock.com 2011 Annual Report Download - page 110

Table of Contents
Overstock.com, Inc.
Notes to Consolidated Financial Statements (Continued)
2. ACCOUNTING POLICIES (Continued)
active listings across the country. Revenue from the real estate listing business is included in the fulfillment partner segment, on a net basis.
Prior to June 2011, we operated Eziba.com, a private sale website featuring home décor products, jewelry, apparel and accessories from many leading
brands. In June 2011, we turned off the Eziba.com website; however, we continue to sell the type of products that were listed on Eziba.com through our
websites, O.co and Overstock.com.
Revenue from our other businesses is less than 1% of total net revenues.
International business
We began selling products through our Website to customers outside the United States in late August 2008. As of December 31, 2011, we were offering
products to customers in over 105 countries and non-U.S. territories. We do not have sales 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 our international business is included in either direct or
fulfillment partner revenue, depending on whether the product is shipped from our warehouses or from a fulfillment partner. Less than 1% of our sales are
made to international customers.
Total revenues from International sales were $8.8 million $9.4 million and $5.1 million for the years ended December 31, 2011, 2010 and 2009
respectively.
Club O loyalty program
We have a customer loyalty program called Club O for which we sell annual memberships. We record membership fees as deferred revenue and we
recognize revenue ratably over the membership period. The Club O loyalty program allows members to earn reward dollars for qualifying purchases made on
our Website. We also have a co-branded credit card program (see "Co-branded credit card revenue" below for more information). Co-branded cardholders are
also Club O members and earn additional reward dollars for purchases made on our Website, and from other merchants. Reward dollars earned may be
redeemed on future purchases made through our Website. Club O reward dollars expire 90 days after the customer's Club O membership expires. We account
for these transactions as multiple element arrangements and allocate value to the elements using their relative fair values. We include the value of reward
dollars earned in deferred revenue and we record it as a reduction of revenue at the time the reward dollars are earned.
We recognize revenue for Club O reward dollars when: (i) customers redeem their reward dollars as part of a purchase at our Website, (ii) reward dollars
expire or (iii) the likelihood of reward dollars being redeemed by a customer is remote ("reward dollar breakage"). Due to the loyalty program's short history,
currently no reward dollar breakage is recognized until the reward dollars expire. However, in the future we plan to recognize such breakage based upon
historical redemption patterns.
In instances where customers receive free Club O reward dollars not associated with any purchases, we account for these transactions as sales incentives
such as coupons and record a reduction of revenue at the time the reward dollars are redeemed.
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