Overstock.com 2012 Annual Report Download - page 30

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Table of Contents
Our pricing strategy may not meet customers' price expectations or result in net income.
Demand for our products is generally highly sensitive to price. Our pricing strategies have had, and may continue to have, a significant impact on
our net sales and net income. We often offer discounted prices, and free or discounted shipping as a means of attracting customers and encouraging
repeat purchases. Such offers and discounts reduce our margins. In addition, our competitors' pricing and marketing strategies are beyond our control
and can significantly impact the results of our pricing strategies. If we fail to meet our customers' price expectations, or if we are unable to compete
effectively with our competitors when they engage in aggressive pricing strategies or other competitive activities, our business would suffer.
If the products that we offer on our Website do not reflect our customers' tastes and preferences, our sales and profit margins would decrease.
Our success depends in part on our ability to offer products that reflect consumers' tastes and preferences. Consumers' tastes are subject to
frequent, significant and sometimes unpredictable changes. Because some of the products that we sell consist of manufacturers' and retailers' excess
inventory, we have limited control over some of the products that we are able to offer for sale. If our merchandise fails to satisfy customers' tastes or
respond to changes in customer preferences, our sales could suffer and we could be required to mark down unsold inventory, as we have in the past,
which would depress our profit margins. In addition, any failure to offer products in line with customers' preferences could allow our competitors to
gain market share. This could have an adverse effect on our business.
The loss of key personnel or any inability to attract and retain additional personnel could affect our ability to successfully grow our business.
Our performance is substantially dependent on the continued services and on the performance of our senior management and other key personnel.
Our performance also depends on our ability to retain and motivate our officers and key employees. The loss of the services of any of our executive
officers or other key employees for any reason could harm our business. Occasionally, members of senior management or key employees may find it
necessary to take a leave of absence due to medical or other causes. On February 12, 2013 we announced that our Chief Executive Officer and
Chairman of the Board, Dr. Patrick M. Byrne, will be taking a personal leave of absence for medical reasons. Leaves of absence for temporary or
extended periods may harm our business. We do not have employment agreements with any of our key personnel and we do not maintain "key person"
life insurance policies. Our future success also depends on our ability to identify, attract, hire, train, retain and motivate other highly-skilled technical,
managerial, editorial, merchandising, marketing and customer service personnel. Competition for such personnel is intense. Our failure to retain and
attract the necessary technical, managerial, editorial, merchandising, marketing, and customer service personnel could harm our business.
In order to obtain future revenue growth and sustain profitability, we will have to attract and retain customers on cost-effective terms.
Our success depends on our ability to attract and retain customers on cost-effective terms. We have relationships with online services, search
engines, affiliate marketing websites, directories and other website and e-commerce businesses to provide content, advertising banners and other links
that direct customers to our Website. We rely on these relationships as significant sources of traffic to our Website and to generate new customers. In
the past we have terminated affiliate marketing websites as a result of efforts by certain states to require us to collect sales taxes based on the presence of
those third party Internet advertising affiliates in those states, and we are likely to do so again in the future if necessary. If we are unable to develop or
maintain these relationships on acceptable terms, our ability
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