Overstock.com 2014 Annual Report Download - page 12

Table of Contents
we electronically file such material with, or furnish it to, the Securities and Exchange Commission. Our Internet Website and the information contained
therein or connected thereto are not a part of or incorporated into this Annual Report on Form 10-K.
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We are an e-commerce business and we depend on the continued use of the Internet and the adequacy of the Internet infrastructure.
Our business depends upon the widespread use of the Internet and e-commerce. Factors which could reduce the widespread use of the Internet for e-
commerce include:
• actual or perceived lack of security of information or privacy protection;
• cyber-attacks or other disruptions or damage to the Internet or to users’ computers or mobile devices, or the software or cloud-based service
programs on which they may depend;
• significant increases in the costs of transportation of goods; and
• taxation and governmental regulation.
We depend on our relationships with independent partners for a large portion of the products that we offer for sale on our Website. If we fail to maintain
these relationships, our business will suffer.
At December 31, 2014, we had relationships with approximately 3,200 independent partners whose products we offer for sale on our Website. Sales
through our partners accounted for approximately 90% of our net revenues for the year ended December 31, 2014. If we do not maintain our existing
relationships or build new relationships with partners on acceptable commercial terms, we may not be able to maintain a broad selection of merchandise, and
our business and prospects would suffer severely. Our agreements with partners are generally terminable at will by either party upon short notice.
We depend on our partners to perform critical services regarding the products that we offer.
In general, we agree to offer the partners’ products on our Website and these partners agree to conduct a number of other traditional retail operations
such as maintaining inventory, preparing merchandise for shipment to our customers and delivering purchased merchandise on a timely basis. We have no
ability to ensure that these third parties will continue to perform these services to our satisfaction or on terms we or our customers consider reasonable. In
addition, because we do not take possession of these fulfillment parties’ products (other than on the return of such products), we are generally unable to fulfill
these traditional retail operations ourselves. If our customers become dissatisfied with the services provided by these third parties, our business and reputation
and brand would suffer.
Risks associated with the suppliers from whom our products are sourced and the safety of those products could adversely affect our financial performance.
Global sourcing of many of the products we sell is an important aspect of our business. We depend on our ability to access products from qualified
suppliers in a timely and efficient manner. Our ability to find qualified suppliers who meet our standards and supply products in a timely and efficient manner
is a significant challenge, especially with respect to goods sourced from outside the U.S. Political and economic instability, the financial stability of
suppliers, suppliers’ ability to meet our standards, labor problems experienced by our suppliers, the availability of raw materials, merchandise quality issues,
currency exchange rates, transport availability and cost, transport security, inflation, and other factors relating to the suppliers and the countries in which
they are located or from which they may source materials or products are beyond our control. We also largely rely on our suppliers’ representations of product
content and quality. Concerns regarding product content or quality, or the safety of products that we source from our suppliers, could cause shoppers to avoid
purchasing certain products from us, or to seek alternative sources of supply for all of their needs, even if the basis for the concern is outside of our control.
Any lost confidence on the part of our customers would be difficult and costly to reestablish. As such, any issue regarding the safety of any items we sell,
regardless of the cause, could adversely affect our financial performance. Further, if any product we sell were to cause physical injury or injury to property,
the injured party or parties might bring claims against us. Any indemnity
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