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sales; ● offer suppliers a high quality, cost-effective fulfillment
process; and ● continue to provide suppliers with a dynamic and real-time
view of our demand and inventory needs. If we are unable to provide our suppliers with
a compelling return on investment and an ability to increase their sales, we may be unable to maintain and/or expand our supplier network,
which would negatively impact our business. We depend on our suppliers to perform certain
services regarding the products that we offer. As part of offering our suppliers’ products
for sale on our sites, suppliers are often responsible for conducting a number of traditional retail operations with respect to their
respective products, including maintaining inventory and preparing merchandise for shipment to our customers. In these instances, we
may be unable to ensure that suppliers will perform these services to our or our customers’ satisfaction in a manner that provides
our customer with a unified brand experience or on commercially reasonable terms. If our customers become dissatisfied with the services
provided by our suppliers, our business, reputation and brands could suffer. 53 We
depend on our relationships with third parties, and changes in our relationships with these parties could adversely impact our revenue
and profits. We
rely on third parties to operate certain elements of our business. For example, we use carriers such as FedEx, UPS, DHL and the U.S.
Postal Service to deliver products. As a result, we may be subject to shipping delays or disruptions caused by inclement weather, natural
disasters, system interruptions and technology failures, labor activism, health epidemics or bioterrorism. We are also subject to risks
of breakage or other damage during delivery by any of these third parties. We also use and rely on other services from third parties,
such as retail partner services, telecommunications services, customs, consolidation and shipping services, as well as warranty, installation
and design services. We
may be unable to maintain these relationships, and these services may also be subject to outages and interruptions that are not within
our control. For example, failures by our telecommunications providers have in the past and may in the future interrupt our ability to
provide phone support to our customers. Third parties may in the future determine they no longer wish to do business with us or may decide
to take other actions or make changes to their practices that could harm our business. We may also determine that we no longer want to
do business with them. If products are not delivered in a timely fashion or are damaged during the delivery process, or if we are not
able to provide adequate customer support or other services or offerings, our customers could become dissatisfied and cease buying products
through our sites, which would adversely affect our operating results. The
seasonal trends in our business create variability in our financial and operating results and place increased strain on our operations. We
experience surges in orders associated with promotional activities and seasonal trends. This activity may place additional demands on
our technology systems and logistics network and could cause or exacerbate slowdowns or interruptions. Any such system, site or service
interruptions could prevent us from efficiently receiving or fulfilling orders, which may reduce the volume or quality of goods or services
we sell and may cause customer dissatisfaction and harm our reputation and brand. Our
business may be adversely affected if we are unable to provide our customers a cost-effective shopping platform that is able to respond
and adapt to rapid changes in technology. The
number of people who access the Internet through devices other than personal computers, including mobile phones, smartphones, handheld
computers such as notebooks and tablets, video game consoles, and television set-top devices, has increased dramatically in the past
few years. We continually upgrade existing technologies and business applications to keep pace with these rapidly changing and continuously
evolving technologies, and we may be required to implement new technologies or business applications in the future. The implementation
of these upgrades and changes requires significant investments and as new devices and platforms are released, it is difficult to predict
the problems we may encounter in developing applications for these alternative devices and platforms. Additionally, we may need to devote
significant resources to the support and maintenance of such applications once created. Our results of operations may be affected by
the timing, effectiveness and costs associated with the successful implementation of any upgrades or changes to our systems and infrastructure
to accommodate such alternative devices and platforms. Further, in the event that it is more difficult or less compelling for our customers
to buy products from us on their mobile or other devices, or if our customers choose not to buy products from us on such devices or to
use mobile or other products that do not offer access to our sites, our customer growth could be harmed and our business, financial condition
and operating results may be materially adversely affected. Significant
merchandise returns could harm our business. We
allow our customers to return products, subject to our return policy. If merchandise returns are significant, our business, prospects,
financial condition and results of operations could be harmed. Further, we modify our policies relating to returns from time to time,
which may result in customer dissatisfaction or an increase in the number of product returns. Many of our products are large and require
special handling and delivery. From time to time our products are damaged in transit, which can increase return rates and harm our brand. 54 Uncertainties
in economic conditions and their impact on consumer spending patterns, particularly in the home goods segment, could adversely impact
our operating results. Consumers
may view a substantial portion of the products we offer as discretionary items rather than necessities. As a result, our results of operations
are sensitive to changes in macro-economic conditions that impact consumer spending, including discretionary spending. Some of the factors
adversely affecting consumer spending include levels of unemployment; consumer debt levels; changes in net worth based on market changes
and uncertainty; home foreclosures and changes in home values or the overall housing, residential construction or home improvement markets;
fluctuating interest rates; credit availability, including mortgages, home equity loans and consumer credit; government actions; fluctuating
fuel and other energy costs; fluctuating commodity prices and general uncertainty regarding the overall future economic environment.
Adverse economic changes in any of the regions in which we sell our products could reduce consumer confidence and could negatively affect
net revenue and have a material adverse effect on our operating results. Our
business relies heavily on email and other messaging services, and any restrictions on the sending of emails or messages or an inability
to timely deliver such communications could materially adversely affect our net revenue and business. Our
business is highly dependent upon email and other messaging services for promoting our sites and products. If we are unable to successfully
deliver emails or other messages to our subscribers, or if subscribers decline to open our emails or other messages, our net revenue
and profitability would be materially adversely affected. Changes in how webmail applications organize and prioritize email may also
reduce the number of subscribers opening our emails. For example, in 2013 Google Inc.’s Gmail service began offering a feature
that organizes incoming emails into categories (for example, primary, social and promotions). Such categorization or similar inbox organizational
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. Actions by third parties to block, impose restrictions
on or charge for the delivery of emails or other messages could also adversely impact our business. From time to time, Internet service
providers or other third parties may block bulk email transmissions or otherwise experience technical difficulties that result in our
inability to successfully deliver emails or other messages to third parties. Changes in the laws or regulations that limit our ability
to send such communications or impose additional requirements upon us in connection with sending such communications would also materially
adversely impact our business. Our use of email and other messaging services to send communications about our products or other matters
may also result in legal claims against us, which may cause us increased expenses, and if successful might result in fines and orders
with costly reporting and compliance obligations or might limit or prohibit our ability to send emails or other messages. 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 materially adversely affect our
business, financial condition and operating results. We
are subject to risks related to online payment methods. We
accept payments using a variety of methods, including credit card, debit card, PayPal, credit accounts and gift cards. As we offer new
payment options to consumers, we may be subject to additional regulations, compliance requirements and fraud. For certain payment methods,
including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower
profitability. We are also subject to payment card association operating rules and certification requirements, including the Payment
Card Industry Data Security Standard and rules governing electronic funds transfers, which could change or be reinterpreted to make it
difficult or impossible for us to comply. As our business changes, we may also be subject to different rules under existing standards,
which may require new assessments that involve costs above what we currently pay for compliance. If we fail to comply with the rules
or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights
to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be
subject to fines or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card and debit
card payments from consumers or to facilitate other types of online payments. If any of these events were to occur, our business, financial
condition and operating results could be materially adversely affected. We
occasionally receive orders placed with fraudulent credit card data. We may suffer losses as a result of orders placed with fraudulent
credit card data even if the associated financial institution approved payment of the orders. Under current credit card practices, we
may be liable for fraudulent credit card transactions. If we are unable to detect or control credit card fraud, our liability for these
transactions could harm our business, financial condition and results of operations. 55 Government
regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply with these regulations could
substantially harm our business and results of operations. We