BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 2011

BUSINESS SEGMENTS

BUSINESS SEGMENTS

10. BUSINESS SEGMENTS

Segment information has been prepared in accordance with ASC Topic 280 Segment Reporting. Segments were determined based on products and services provided by each segment. There were no inter-segment sales or transfers during the three months ended June 30, 2011 and 2010. We evaluate the performance of our segments and allocate resources to them based primarily on gross profit. The table below summarizes information about reportable segments for the three and six months ended June 30, 2011 and 2010 (in thousands):

	Three months ended June 30,							Six months ended June 30,
	Direct		Fulfillment  partner		Total			Direct		Fulfillment  partner		Total
2011
Revenue, net	$	33,443	$	201,549	$	234,992		$	81,604	$	418,858	$	500,462
Cost of goods sold	30,231		164,991		195,222			73,261		337,347		410,608
Gross profit	$	3,212	$	36,558	$	39,770		$	8,343	$	81,511	$	89,854
Operating expenses					(47,188		)					(97,259		)
Other income (expense), net					(364		)					(799		)
Provision for income taxes					16							38
Net loss					$	(7,798	)					$	(8,242	)
2010
Revenue, net	$	42,382	$	188,871	$	231,253		$	92,950	$	402,633	$	495,583
Cost of goods sold	37,434		152,240		189,674			81,018		325,715		406,733
Gross profit	$	4,948	$	36,631	$	41,579		$	11,932	$	76,918	$	88,850
Operating expenses					(42,860		)					(85,857		)
Other income (expense), net					(68		)					(483		)
Provision (benefit) for income taxes					(7		)					122
Net income (loss)					$	(1,342	)					$	2,388

The direct segment includes revenues, direct costs, and cost allocations associated with sales fulfilled from our leased warehouses. Costs for this segment include product costs and outbound freight, warehousing and fulfillment costs, credit card fees and customer service costs.

The fulfillment partner segment includes revenues, direct costs and cost allocations associated with our third-party fulfillment partner sales and are earned from selling the merchandise of third parties over our Website. Costs for this segment include product costs, outbound freight and fulfillment costs, credit card fees and customer service costs.

Assets have not been allocated between the segments for our internal management purposes and, as such, they are not presented here.

For the three and six months ended June 30, 2011 and 2010, over 99% of sales were made to customers in the United States of America. At June 30, 2011 and December 31, 2010, all of our fixed assets were located in the United States of America.