BUSINESS SEGMENTS

9 Months Ended

Sep. 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 September 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 nine months ended September 30, 2011 and 2010 (in thousands):

	Three months ended September 30,							Nine months ended September 30,
			Fulfillment							Fulfillment
	Direct		partner		Total			Direct		partner		Total
2011
Revenue, net	$	34,749	$	204,989	$	239,738		$	116,353	$	623,847	$	740,200
Cost of goods sold	32,472		168,893		201,365			105,733		506,240		611,973
Gross profit	$	2,277	$	36,096	$	38,373		$	10,620	$	117,607	$	128,227
Operating expenses					46,314							143,573
Other income (expense), net					(86		)					(885		)
Benefit for income taxes					(240		)					(202		)
Net loss					$	(7,787	)					$	(16,029	)
2010
Revenue, net	$	47,508	$	197,912	$	245,420		$	140,458	$	600,545	$	741,003
Cost of goods sold	43,174		160,868		204,042			124,192		486,583		610,775
Gross profit	$	4,334	$	37,044	$	41,378		$	16,266	$	113,962	$	130,228
Operating expenses					44,554							130,411
Other income (expense), net					(226		)					(709		)
Provision (benefit) for income taxes					(44		)					78
Net loss					$	(3,358	)					$	(970	)

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