BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 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 and six months ended June 30, 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 and six months ended June 30, 2012 and 2011 (in thousands):

	Three months ended June 30,							Six months ended June 30,
	Direct		Fulfillment partner		Total			Direct		Fulfillment partner		Total
2012
Revenue, net	$	33,936	$	205,600	$	239,536		$	74,833	$	427,070	$	501,903
Cost of goods sold	31,108		165,259		196,367			68,738		342,488		411,226
Gross profit	$	2,828	$	40,341	$	43,169		$	6,095	$	84,582	$	90,677
Operating expenses					(43,150		)					(88,183		)
Other income (expense), net					493							746
Provision for income taxes					42							51
Net income					$	470						$	3,189
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	)

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, 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 and six months ended June 30, 2012 and 2011, over 99% of sales were made to customers in the United States. At June 30, 2012 and December 31, 2011, all of our fixed assets were located in the United States.