Overstock.com 2013 Annual Report Download - page 18

Table of Contents
If we do not respond to rapid technological changes, our services could become obsolete, and we could lose customers.
The Internet and the online commerce industry are changing rapidly. To remain competitive, we must continue to enhance and improve the
functionality and features of our e-commerce businesses. If we fail to do so, we may lose customers. If competitors introduce new products or services using
new technologies or if new industry standards and practices emerge, our Website and our proprietary technology and systems may become obsolete. Our
failure to respond to technological change or to adequately maintain, upgrade and develop our computer network and the systems used to process customers’
orders and payments could harm our business.
We have an evolving business model.
Our business model has evolved in the past and continues to do so. In prior years we have added additional types of services and product offerings
and in some cases we have modified or discontinued those offerings. We may continue to try to offer additional types of products or services, and we cannot
offer any assurance that any of them will be successful. From time to time we have also modified aspects of our business model relating to our product mix
and the mix of direct/fulfillment partner sourcing of the products we offer. We may continue to modify this aspect of our business as well as other significant
aspects of our business. We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to the business. The
additions and modifications to our business have increased the complexity of our business and placed significant strain on our management, personnel,
operations, systems, technical performance, financial resources, and internal financial control and reporting functions. Future additions to or modifications of
our business are likely to have similar effects. We may not be able to manage growth effectively, which could damage our reputation, limit our growth and
negatively affect our operating results. Further, any new business or website we launch that is not favorably received by consumers could damage our
reputation or the Overstock.com brand.
We are attempting to expand our international business, which may cause our business to become increasingly susceptible to numerous
international business risks and challenges that could affect our profitability.
We sell products in international markets, and in the future we may expand into these markets more aggressively. International sales and transactions
are subject to inherent risks and challenges that could adversely affect our profitability, including:
•the need to develop new supplier and manufacturer relationships;
•the need to comply with additional U.S. and foreign laws and regulations to the extent applicable, including but not limited to, restrictions
on advertising practices, regulations governing online services, restrictions on importation of specified or proscribed items, importation
quotas, consumer protection laws, enforcement of intellectual property rights, laws dealing with consumer and data protection, privacy,
encryption, and restrictions on pricing or discounts;
•changes in international laws, regulatory requirements, taxes and tariffs; and
•geopolitical events, such as war and terrorist attacks.
To the extent we generate international sales transactions in the future, any negative impact on our international operations could negatively impact our
business. To date, most of our international sales have been denominated in U.S. dollars, and we have not had significant foreign currency risk on those
sales. However, in the future, gains and losses on the conversion of foreign payments into U. S. dollars may contribute to fluctuations in our results of
operations and fluctuating exchange rates could cause reduced gross revenues and/or gross profit percentages from non-dollar-denominated international sales.
Additionally, penalties for non-compliance with laws applicable to international business and trade, such as the U.S. Foreign Corrupt Practices Act, could
negatively impact our business.
Our foreign brand domain name may cause confusion.
In July 2010, we undertook an effort to associate our brand globally with the domain address: www.O.co. We did this in part because in many
foreign markets the word “Overstock” lacked a good foreign cognate. Following a period of testing for the O.co brand and domain address, we returned to the
Overstock.com name as our primary brand domestically because domestic consumer acceptance did not occur as quickly as we had hoped. While we have
returned domestically to the Overstock.com brand and principal domain address, there is no assurance that the use of Overstock.com or O.co will gain
acceptance or have success in foreign markets.
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