BUSINESS SEGMENTS

6 Months Ended

Jun. 30, 2013

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 how we manage the business. There were no inter-segment sales or transfers during the three and six months ended June 30, 2013 and 2012. 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, 2013 and 2012 (in thousands):

	Three months ended June 30,							Six months ended June 30,
			Fulfillment							Fulfillment
	Direct		partner		Total			Direct		partner		Total
2013
Revenue, net	$	36,250	$	256,954	$	293,204		$	78,192	$	527,006	$	605,198
Cost of goods sold	31,842		203,523		235,365			68,991		419,432		488,423
Gross profit	$	4,408	$	53,431	$	57,839		$	9,201	$	107,574	$	116,775
Operating expenses					(53,674		)					(105,195		)
Other income (expense), net					(155		)					173
Provision for income taxes					312							358
Net income					$	3,698						$	11,395
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

The direct segment includes revenues, direct costs, and cost allocations associated with sales fulfilled from our 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 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, 2013 and 2012, 99% of sales were made to customers in the United States. At June 30, 2013 and December 31, 2012, all of our fixed assets were located in the United States.