Overstock.com 2011 Annual Report Download - page 51

Table of Contents
principal segments—a "direct" business and a "fulfillment partner" business. We currently offer approximately 251,000 non-BMMG products and
approximately 637,000 BMMG products. Consumers and businesses are able to access and purchase our products 24 hours a day from the convenience of a
computer, Internet-enabled mobile telephone or other Internet-enabled devices. Our team of customer service representatives assists customers by telephone,
instant online chat and e-mail. We also derive revenue from other businesses advertising products or services on our Website. We have car, insurance and
travel listing businesses through which cars, insurance and travel-related products and services may be purchased from vendors. Nearly all of our sales are to
customers located in the United States. During the years ended December 31, 2011 and 2010 no single customer accounted for more than 1% of our total
revenue.
Direct business
Our direct business includes sales made to individual consumers and businesses, which are fulfilled from our leased warehouses in Salt Lake City, Utah.
During the year ended December 31, 2011, we fulfilled approximately 16% of our order volume through our warehouses. Our warehouses generally ship
between 4,000 and 7,000 orders per day and up to approximately 10,000 orders per day during peak periods, using overlapping daily shifts.
Fulfillment partner business
For our fulfillment partner business, we sell merchandise of other retailers, cataloguers or manufacturers ("fulfillment partners") through our Website.
We are considered to be the primary obligor for the majority of these sales transactions and we record revenue from the majority of these sales transactions on
a gross basis. Our use of the term "partner" or "fulfillment partner" does not mean that we have formed any legal partnerships with any of our fulfillment
partners. We currently have relationships with approximately 2,000 third parties who supply approximately 242,000 non-BMMG products, as well as most of
the BMMG products, on our Website. These third-party fulfillment partners perform essentially the same fulfillment operations as our warehouses, such as
order picking and shipping; however, we handle returns and customer service related to substantially all orders placed through our Website. Revenue
generated from sales on our Shopping site from both the direct and fulfillment partner businesses is recorded net of returns, coupons and other discounts.
Both direct and fulfillment partner revenues are seasonal, with revenues historically being the highest in the fourth quarter, which ends December 31,
reflecting higher consumer holiday spending. We anticipate this will continue in the foreseeable future.
Generally, we require verification of receipt of payment, or authorization from credit card or other payment vendors whose services we offer to our
customers (such as PayPal and BillMeLater), before we ship products to consumers or business purchasers. From time to time we grant credit to our business
purchasers with normal credit terms (typically 30 days). For sales in our fulfillment partner business, we generally receive payments from our customers
before our payments to our suppliers are due.
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.
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