Overstock.com 2015 Annual Report Download - page 43

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The following discussion and analysis contains forward-looking statement relating to future events or our future financial or operating performance
that involve risks and uncertainties, as set forth above under "Special Cautionary Note Regarding Forward-Looking Statements." Our actual results could
differ materially from those anticipated in these forward-looking statements as a result of certain factors described in this Annual Report on Form 10-K,
including those set forth above under "Special Cautionary Note Regarding Forward-Looking Statements" or in Item 1A under the heading "Risk Factors" or
elsewhere in this Annual Report on Form 10-K.
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We are an online retailer offering a broad range of price-competitive brand name, non-brand name and closeout products, including furniture, home
decor, bedding and bath, housewares, jewelry and watches, apparel and designer accessories, health and beauty products, electronics and computers, and
sporting goods, among other products. We also sell hundreds of thousands of best seller and current run books, magazines, CDs, DVDs and video games
(“BMMG”). We sell these products and services through our Internet websites located at www.overstock.com, www.o.co and www.o.biz (referred to
collectively as the “Website”). Although our three websites are located at different domain addresses, the technology and equipment and processes
supporting the Website and the process of order fulfillment described herein are the same for all three websites.
Our company, based in Salt Lake City, Utah, was founded in 1997. We launched our initial website in March 1999 and were re-incorporated in
Delaware in 2002. As used herein, “Overstock,” “Overstock.com,”, “O.co,” “we,” “our” and similar terms include Overstock.com, Inc. and its subsidiaries,
unless the context indicates otherwise.
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We deal primarily in price-competitive, new, replenishable and closeout merchandise and use the Internet to aggregate both supply and demand to
create an efficient marketplace for selling these products. We provide our customers an opportunity to conveniently shop for a broad range of price-
competitive products. We continually add new, and sometimes limited, inventory to our Website in order to create an atmosphere that encourages customers
to visit frequently and purchase products before our inventory sells out. We provide suppliers with access to a large customer base and convenient services
for order fulfillment, customer service, returns handling, and other services. The merchandise offered on our Website is from a variety of sources including
well-known, brand-name manufacturers. We have organized our shopping business (sales of product offered through the Shopping Section of our Website)
into two principal segments-a "direct" business and a "partner" business. We currently offer approximately 877,000 non-BMMG products and approximately
1.1 million BMMG products. Consumers and businesses are able to access and purchase our products 24 hours a day from the convenience of a computer,
Internet-enabled mobile telephone or other Internet-enabled device. Our team of customer service representatives assists customers by telephone, instant
online chat and e-mail. We also derive revenue from other businesses advertising products or services on our Website. Our sales are primarily to customers
located in the United States. During the years ended December 31, 2015, 2014 and 2013 no single customer accounted for more than 1% of our total net
revenue.
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Our direct business includes sales made to individual consumers and businesses from our owned inventory and that are fulfilled primarily from our
warehouse in Salt Lake City, Utah. During the year ended December 31, 2015, we fulfilled approximately 8% of our order volume through our warehouse,
which generally ships between 2,000 and 5,000 packages per day and up to approximately 16,000 orders per day during peak periods, using overlapping
daily shifts.
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For our partner business, we sell merchandise from manufacturers, distributors and other suppliers ("partners") primarily through our Website. We are
considered to be the primary obligor for the majority of these sales transactions and we record revenue from the majority of these sales transactions on a gross
basis. Our use of the term "partner" does not mean that we have formed any legal partnerships with any of our partners. We currently have relationships with
approximately 3,700 third parties who supply approximately 870,000 non-BMMG products, as well as most of the BMMG products, on our Website. These
third party partners generally perform the same fulfillment operations as our warehouses, such as order picking and shipping; however, we handle returns and
customer service related to substantially all orders placed through our Website. Revenue generated from sales on our Shopping site from both the direct and
partner businesses is recorded net of returns, coupons and other discounts.
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