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services, our technology infrastructure may be subject to increased risk of slowdown or interruption as a result of integration with |
such services and/or failures by such third parties, which are out of our control. Our net revenue depends on the number of visitors |
who shop on our sites and the volume of orders we can handle. Unavailability of our sites or reduced order fulfillment performance would |
reduce the volume of goods sold and could also materially adversely affect consumer perception of our brand. We may experience periodic system interruptions |
from time to time. In addition, continued growth in our transaction volume, as well as surges in online traffic and orders associated |
with promotional activities or seasonal trends in our business, place additional demands on our technology platform and could cause or |
exacerbate slowdowns or interruptions. If there is a substantial increase in the volume of traffic on our sites or the number of orders |
placed by customers, we may be required to further expand and upgrade our technology, logistics network, transaction processing systems |
and network infrastructure. There can be no assurance that we will be able to accurately project the rate or timing of increases, if |
any, in the use of our sites or expand and upgrade our systems and infrastructure to accommodate such increases on a timely basis. In |
order to remain competitive, we must continue to enhance and improve the responsiveness, functionality and features of our sites, which |
is particularly challenging given the rapid rate at which new technologies, customer preferences and expectations and industry standards |
and practices are evolving in the e-commerce industry. Accordingly, we redesign and enhance various functions on our sites on a regular |
basis, and we may experience instability and performance issues as a result of these changes. Any slowdown, interruption or performance failure |
of our sites and the underlying technology and logistics infrastructure could harm our business, reputation and our ability to acquire, |
retain and serve our customers, which could materially adversely affect our results of operations. 51 Our failure or the failure of third-party |
service providers to protect our sites, networks and systems against security breaches, or otherwise to protect our confidential information, |
could damage our reputation and brand and substantially harm our business and operating results. We collect, maintain, transmit and store data |
about our customers, employees, contractors, suppliers, vendors and others, including credit card information and personally identifiable |
information, as well as other confidential and proprietary information. We also employ third-party service providers that store, process |
and transmit certain proprietary, personal and confidential information on our behalf. We rely on encryption and authentication technology |
licensed from third parties in an effort to securely transmit, encrypt, anonymize or pseudonymize certain confidential and sensitive |
information, including credit card numbers. Advances in computer capabilities, new technological discoveries or other developments may |
result in the whole or partial failure of this technology to protect transaction and personal data or other confidential and sensitive |
information from being breached or compromised. Our security measures, and those of our third-party service providers, may not detect |
or prevent all attempts to hack our systems, denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, ransom-ware, |
social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored |
in or transmitted by our sites, networks and systems or that we or our third-party service providers otherwise maintain, including payment |
card systems and human resources management platforms. We and our service providers may not anticipate, discover or prevent all types |
of attacks until after they have already been launched, and techniques used to obtain unauthorized access to or sabotage systems change |
frequently and may not be known until launched against us or our third-party service providers. In addition, security breaches can also |
occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by persons with whom we |
have commercial relationships. Breaches of our security measures or those of |
our third-party service providers or cyber security incidents could result in unauthorized access to our sites, networks and systems; |
unauthorized access to and misappropriation of personal information, including consumers’ and employees’ personally identifiable |
information, or other confidential or proprietary information of ourselves or third parties; limited or terminated access to certain |
payment methods or fines or higher transaction fees to use such methods; viruses, worms, spyware or other malware being served from our |
sites, networks or systems; deletion or modification of content or the display of unauthorized content on our sites; interruption, disruption |
or malfunction of operations; costs relating to breach remediation, deployment or training of additional personnel and protection technologies, |
responses to governmental investigations and media inquiries and coverage; engagement of third-party experts and consultants; litigation, |
regulatory action and other potential liabilities. If any of these breaches of security occur, our reputation and brand could be damaged, |
our business may suffer, we could be required to expend significant capital and other resources to alleviate problems caused by such |
breaches and we could be exposed to a risk of loss, litigation or regulatory action and possible liability. In addition, any party who |
is able to illicitly obtain a customer’s password could access that customer’s transaction data or personal information. |
Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data |
security and other laws, and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security |
measures, which could have a material adverse effect on our business, financial condition and operating results. We may need to devote |
significant resources to protect against security breaches or to address problems caused by breaches, diverting resources from the growth |
and expansion of our business. We may be subject to product liability |
and other similar claims if people or property are harmed by the products we sell. Some of the products we sell may expose us to |
product liability and other claims and litigation (including class actions) or regulatory action relating to safety, personal injury, |
death or environmental or property damage. Some of our agreements with members of our supply chain may not indemnify us from product |
liability for a particular product, and some members of our supply chain may not have sufficient resources or insurance to satisfy their |
indemnity and defense obligations. Although we maintain liability insurance, we cannot be certain that our coverage will be adequate |
for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. Risks associated with the suppliers from |
whom our products are sourced could materially adversely affect our financial performance as well as our reputation and brand. We depend on our ability to provide our customers |
with a wide range of products from qualified suppliers, many of whom are located in countries outside of the U.S., in a timely and efficient |
manner. Political and economic instability, the financial stability of suppliers, suppliers’ ability to meet our standards, labor |
problems experienced by suppliers, the availability or cost of raw materials, merchandise quality issues, currency exchange rates, trade |
tariff developments, transport availability and cost, transport security, inflation, and other factors relating to our suppliers are |
beyond our control. 52 Our agreements with most of our suppliers do |
not provide for the long-term availability of merchandise or the continuation of particular pricing practices, nor do they usually restrict |
such suppliers from selling products to other buyers. There can be no assurance that our current suppliers will continue to seek to sell |
us products on current terms or that we will be able to establish new or otherwise extend current supply relationships to ensure product |
acquisitions in a timely and efficient manner and on acceptable commercial terms. Our ability to develop and maintain relationships with |
reputable suppliers and offer high quality merchandise to our customers is critical to our success. If we are unable to develop and maintain |
relationships with suppliers that would allow us to offer a sufficient amount and variety of quality merchandise on acceptable commercial |
terms, our ability to satisfy our customers’ needs, and therefore our long-term growth prospects, would be materially adversely |
affected. Further, we rely on our suppliers’ representations |
of product quality, safety and compliance with applicable laws and standards. If our suppliers or other vendors violate applicable laws, |
regulations or our supplier code of conduct, or implement practices regarded as unethical, unsafe, or hazardous to the environment, it |
could damage our reputation and negatively affect our operating results. Further, concerns regarding the safety and quality of products |
provided by our suppliers could cause our customers to avoid purchasing those products from us, or avoid purchasing products from us |
altogether, even if the basis for the concern is outside of our control. As such, any issue, or perceived issue, regarding the quality |
and safety of any items we sell, regardless of the cause, could adversely affect our brand, reputation, operations and financial results. We also are unable to predict whether any of |
the countries in which our suppliers’ products are currently manufactured or may be manufactured in the future will be subject |
to new, different, or additional trade restrictions imposed by the U.S. or foreign governments or the likelihood, type or effect of any |
such restrictions. Any event causing a disruption or delay of imports from suppliers with international manufacturing operations, including |
the imposition of additional import restrictions, restrictions on the transfer of funds or increased tariffs or quotas, could increase |
the cost or reduce the supply of merchandise available to our customers and materially adversely affect our financial performance as |
well as our reputation and brand. Furthermore, some or all of our suppliers’ foreign operations may be adversely affected by political |
and financial instability, resulting in the disruption of trade from exporting countries, restrictions on the transfer of funds or other |
trade disruptions. In addition, our business with foreign suppliers |
may be affected by changes in the value of the U.S. dollar relative to other foreign currencies. For example, any movement by any other |
foreign currency against the U.S. dollar may result in higher costs to us for those goods. Declines in foreign currencies and currency |
exchange rates might negatively affect the profitability and business prospects of one or more of our foreign suppliers. This, in turn, |
might cause such foreign suppliers to demand higher prices for merchandise in their effort to offset any lost profits associated with |
any currency devaluation, delay merchandise shipments, or discontinue selling to us altogether, any of which could ultimately reduce |
our sales or increase our costs. Our suppliers have imposed conditions in |
our business arrangements with them. If we are unable to continue satisfying these conditions, or such suppliers impose additional restrictions |
with which we cannot comply, it could have a material adverse effect on our business, financial condition and operating results. Our suppliers have strict conditions for doing |
business with them. Several are sizeable such as General Electric, Whirlpool and Riggs Distributing. If we cannot satisfy these |
conditions or if they impose additional or more restrictive conditions that we cannot satisfy, our business would be materially adversely |
affected. It would be materially detrimental to our business if these suppliers decided to no longer do business with us, increased the |
pricing at which they allow us to purchase their goods or impose other restrictions or conditions that make it more difficult for us |
to work with them. Any of these events could have a material adverse effect on our business, financial condition and operating results. We may be unable to source new suppliers |
or strengthen our relationships with current suppliers. Our agreements |
with suppliers are generally terminable at will by either party upon short notice. If we do not maintain our existing relationships or |
build new relationships with suppliers on acceptable commercial terms, we may not be able to maintain a broad selection of merchandise, |
and our business and prospects would suffer severely. In order to attract quality suppliers, we mu ● demonstrate our ability to help our suppliers increase their |
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