BUSINESS SEGMENTS

3 Months Ended

Mar. 31, 2012

BUSINESS SEGMENTS

BUSINESS SEGMENTS

8. 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 March 31, 2012 and 2011. 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 months ended March 31, 2012 and 2011 (in thousands):

	Three months ended March 31,
			Fulfillment
	Direct		partner		Total
2012
Revenue, net	$	40,897	$	221,470	$	262,367
Cost of goods sold	37,630		177,229		214,859
Gross profit	$	3,267	$	44,241	$	47,508
Operating expenses					45,033
Other income (expense), net					253
Provision for income taxes					9
Net income					$	2,719
2011
Revenue, net	$	48,161	$	217,309	$	265,470
Cost of goods sold	43,030		172,356		215,386
Gross profit	$	5,131	$	44,953	$	50,084
Operating expenses					50,071
Other income (expense), net					(435		)
Provision for income taxes					22
Net loss					$	(444	)

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, 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 sales of merchandise of third parties over our Website, fulfilled from warehouses maintained by our fulfillment partners. 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 months ended March 31, 2012 and 2011, over 99% of sales were made to customers in the United States of America. At March 31, 2012 and December 31, 2011, all of our fixed assets were located in the United States of America.