Overstock.com 2015 Annual Report Download - page 19
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decreased visitors to our site for a time. If we are unable to develop, implement and maintain effective and efficient advertising and marketing programs, it
could have a material adverse effect on our business.
We rely on paid and natural search engines to attract consumer interest in our product offerings. Potential and existing customers use search engines
provided by search engine companies, including, but not limited to, Google, Bing, and Yahoo!, which use algorithms and other devices to provide users a
natural ranked listing of relevant Internet sites matching a user’s search criteria and specifications. Generally, Internet sites ranked higher in the paid and
natural search results attract the largest visitor share among similar Internet sites, and often benefit from increased sales. Natural search engine algorithms use
information available throughout the Internet, including information available on our site. Search engine companies change their natural search engine
algorithms periodically, and our ranking in natural searches may be adversely affected by those changes. When this occurs, our financial results may suffer
from reduced revenues and from increased marketing expenses, as we believe we have experienced during 2015 and some prior periods, as we seek to replace
lost revenues by using other sources.
Rules and guidelines of these natural search engine companies govern our participation on their sites and how we share relevant Internet information
that may be considered or incorporated into the algorithms used by these sites. If these rules and guidelines change, or if we fail to present, or improperly
present, our site information for use by natural search engine companies, or if any of these natural search engine companies determine that we have violated
their rules or guidelines, as Google did in 2011, or if others improperly present our site information to these search engine companies, we may fail to achieve
an optimum ranking in natural search engine listing results, or we may be penalized in a way that could harm our business.
In addition, large marketplace websites and sites which aggregate marketplace sellers with a large product selection are becoming increasingly
popular, and we may not be able to place our products on these sites to take advantage of their internal search platforms. Further, some shoppers may begin
their searches at a competitor's website, and may not utilize traditional search engines at all. Our inability to place products on or access these sites may have
a material adverse effect on our business.
We depend on email to promote our site and offerings. We provide daily emails to potential customers about our offerings, and email promotions are
an important part of our marketing and help generate a substantial portion of our net revenue. If a significant portion of our target customers no longer utilize
email, or if we are unable to effectively deliver email to our potential customers, our business, financial condition and operating results would be harmed.
Changes in webmail applications’ organization or prioritization of email could reduce the number of potential customers opening our email. For example,
email inbox organization or prioritization features may result in our emails being delivered in a less prominent location in a subscriber’s inbox or viewed as
“spam” by our subscribers and may reduce the likelihood of that subscriber opening our emails. Anything, including legal or regulatory restrictions, that
blocks, imposes restrictions on or imposes charges for the delivery of email could also harm our business. We also rely on social networking messaging
services to send communications and to encourage customers to send communications. Changes to the terms of these social networking services to limit
promotional communications, any restrictions that would limit our ability or our customers’ ability to send communications through their services,
disruptions or downtime experienced by these social networking services or decline in the use of or engagement with social networking services by
customers and potential customers could have a material adverse effect on our business.
Although our business has historically relied heavily on coupons to generate sales, we are experimenting with reductions in our coupon marketing
and are attempting to substitute increased Club O Rewards for a portion of our coupon marketing. We believe that the changes we have made recently have
adversely affected our revenue growth. We are continuing to attempt to increase the attractiveness of our Club O offerings, but have not yet achieved the
results we are seeking, and there
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