Overstock.com 2012 Annual Report Download - page 23

Table of Contents
Cyber-attacks affecting our suppliers, delivery services or other service providers could adversely affect us.
We depend on our fulfillment partners to provide a large portion of the product selection we offer and on vendors for the products we purchase
and offer in our direct business. We also depend on delivery services to deliver products, and on other service providers, including suppliers of services
which support Website operations, including payment systems, customer service support, and communications. Cyber-attacks affecting our delivery
services or any of our most significant suppliers or affecting a significant number of our suppliers of products or services could have a material adverse
effect on our business. The adverse effects could include our inability to source product or fulfill orders, our customers' or suppliers' inability to contact
us or access our Website or call centers or chat lines, or the compromise of our customers' confidential data.
Natural disasters and geo-political events could adversely affect our business.
Natural disasters, including hurricanes, cyclones, typhoons, tropical storms, floods, earthquakes and tsunamis, weather conditions, including
winter storms, droughts and tornados, whether as a result of climate change or otherwise, and geo-political events, including civil unrest or terrorist
attacks, that affect us or our delivery services, suppliers, credit card processors or other service providers could adversely affect our business.
Our insurance coverage and indemnity rights may not adequately protect us against loss.
Although we maintain liability and other types of insurance, including but not limited to, property, workers compensation, general liability, product
liability, and security and privacy breach insurance, we cannot be certain that the types, coverage, or the amounts of coverage we maintain will be
adequate for losses actually incurred, or that the insurance will continue to be available to us on economically reasonable terms. Similarly, although we
are indemnified by most of our suppliers and vendors for product liability for products they supply us, and we have indemnification agreements with
software and hardware suppliers for losses we might incur as a result of the use of the technology products they supply, we are not indemnified by all
our suppliers, nor can we be certain that our indemnification rights are enforceable or adequate to cover actual losses we may incur as a result of the sale
or use of products our indemnitors provide to us. Actual losses for which we are not insured or indemnified, or which exceed our insurance coverage or
the capacity of our indemnitors, 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 retail 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 Rakuten.com, Inc. (formerly 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. Penny Company, Inc., Sears Holding Corporation, Target Corporation, Best Buy Co., Inc., Home Depot, Inc. and
Barnes and Noble, Inc., all of which also have an online presence.
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