Overstock.com 2011 Annual Report Download - page 20

Table of Contents
or delivery times, particularly during the holiday season, could harm our business, prospects, financial condition and results of operations. If our relationships
with these third parties are terminated or impaired or if these third parties are unable to deliver products for us, whether as a result of labor shortage, slow
down or stoppage, deteriorating financial or business condition, terrorist attacks, cyber-attacks, internet or other infrastructure or communications impairment,
natural disasters, or for any other reason, we would be required to use alternative carriers for the shipment of products to our customers. In addition,
conditions such as adverse weather or natural disasters can prevent any carriers from performing their delivery services, which can have an adverse effect on
our customers' satisfaction with us. In any of these circumstances, we may be unable to engage alternative carriers on a timely basis, upon terms we find
acceptable, or at all. Changing carriers, or absence of carrier availability, could have a negative effect on our business, prospects, financial condition and
results of operations. Potential adverse consequences effecting customer satisfaction include:
reduced visibility and accuracy of order status and package tracking;
delays in order processing and product delivery;
increased delivery costs, resulting in reduced profit margins; and
reduced shipment quality, which may result in delivery of damaged products.
Financial performance concerns may cause fulfillment partners or other suppliers to limit or suspend doing business with us, or require prepayments.
We rely upon our fulfillment partners and other suppliers for the product offerings sold on our website and other products and services we use to run our
business. Our ability to retain or attract new fulfillment partners and other suppliers may depend in part on our financial performance. Poor financial
performance may create concern about our creditworthiness, which could result in suppliers choosing to limit or suspend doing business with us or require us
to prepay for our purchases, which could harm our business, prospects, financial condition and results of operations.
We depend upon our credit card processors and payment card associations.
Our customers primarily use credit cards to buy from us. We are dependent upon our credit card processors to process the sales transactions and remit the
proceeds to us. The credit card processors have the right to withhold funds otherwise payable to us to establish a reserve based on their assessment of the
inherent risks of credit card processing and their assessment of the risks of processing our customers' credit cards, and have done so from time to time in the
past. The credit card processors may establish, increase or decrease the amount of any reserve at any time. Any increase in the amounts of the reserves
established by the processors would have an adverse effect on our cash flow and liquidity, and any material unexpected increase could have a material adverse
effect on our business, prospects, financial condition and results of operations.
We are also subject to payment card associations' operating rules, certification requirements and rules governing electronic funds transfers, which could
change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines
and higher transaction fees and lose our ability to accept credit and debit card payments from our customers, process electronic funds transfers, or facilitate
other types of online payments, could have a material adverse effect on our business, prospects, financial condition and results of operations.
Events affecting our credit card processors, including cyber-attacks, internet or other infrastructure or communications impairment or other events that
could interrupt the normal operation of the credit card processors, could have a material adverse effect on our business, prospects, financial condition and
results of operations.
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