1. Finance & Investment Club Consumer Goods Sector Fall 2014 Senior Analyst: Marcela Ocon Junior Analysts: Stephanie Conyack, Priya Gandhi, Phill Barcellona, Haiyun Zhao, Robbie Brussel, E-Commerce Websites in the United States

2. Overview E-Commerce and Online Auctions in the United States Increasing use of Mobile Commerce Increasing Internet Penetration Improving Economic Conditions

3. Value Vision Media (NYSE:VVTV) Gaiam Inc. (NYSE:GAIA) Industry Definition This industry is comprised of companies that primarily sell goods through an online platform and then deliver these goods directly to customers. Companies sell a variety of goods from electronics, to apparel, to household items all across the world. The industry does not include retailers who also sell products in brick and mortar locations. Source: IBIS World Industry Report Zulily Inc. (NYSE: ZU) Overstock.com Inc. (NYSE:OSTK) Blue Nile Inc. (NYSE:NILE) Light in the Box LTD. (NYSE:LITB)

4. Industry Definition Companies in this industry generate revenue by selling a large variety of consumer cyclical products Lower costs with higher convenience Diversification of products makes revenue low risk

5. Industry Breakdown Consumer Goods 7.55T Consumer Discretionary 4.21T Internet & Catalog Retail 365.36B E-Commerce and Online Auctions 297.90B Sector Breakdown by Market Cap

6. Trends Increasing Internet Penetration Improving Economic Conditions Increasing Mobile Commerce Sales

7. Increased International Internet Penetration Internationally, internet penetration has grown 676.3% from 2000-2013 As of 2013, 39% of the entire population had access to the internet Internet users have grown at a CAGR of 9.23% from 2009-2013 Overall North America, Latin America, and Asia have the highest internet penetration worldwide Most companies have completed expansion in North America and are now making efforts to expand world wide Increasing internet penetration worldwide will help companies with international expansion 39% Penetration

8. Trends Increasing Internet Penetration Improving Economic Conditions Increasing Mobile Commerce Sales

9. Improving Economic Conditions Most E-commerce products are pro-cyclical goods and are dependent on consumption spending From 2002-2008, E-commerce sales had grown at a rate of 13.85% From 2008-2010 sales took a dip and only grew at a rate of 5.04% Increasing consumption levels as well as overall improving economic conditions have caused sales to grow at a rate of 8.57% since 2010 As overall economic conditions improve, especially consumption spending, we will see an increase in e- commerce revenues 8.57% 13.85%5.04%

10. Trends Increasing Internet Penetration Improving Economic Conditions Increasing Mobile Commerce Sales

11. As mobile shopping sales begin to grow, brands will begin shifting advertisement budgets towards smartphones and tablets Mobile shopping sales have increased at a CAGR of 39.25%from 2010-2013 and spending on mobile ads has increased at a CAGR of 85.47% from 2010-2013 Retailers will start seeing shift in revenues from computers to mobile devices We predict that for each $1B increase in ad spending, mobile sales revenue will increase by $2.44B

12. Risks and Sensitivities Risk of changing technology Our industry will face constant changes due to new trends in technology In order to keep interest of customers, firms must be able to keep up with the changing technology Risk of government sales tax regulation In recent years different states have made efforts to require sales tax on goods ordered online If taxes are required it could create a lot of new costs for online retailers Risk of fraud In order to maintain customer loyalty retailers will have to increase fraud protection due to recent threats Failure to do so will cause customers to loose trust in the retailers services Risk of adverse economic conditions Due to the cyclical nature of our products, adverse economic conditions could negatively affect our industry Each $11.34 decrease in consumption spending will decrease revenue by $1

13. Key Financials TKRMarke t Cap (M) % of 52 Week High EBITD A (M) ROAProfit Margi n P/EEV/EBI TDA Price/ Book MKTG. as % of Reven ue OSTK584.377.3%18.22.9%5.7%7.325.94.57.0% VVTV322.386.1%12.90.6%-0.9%N/A26.44.10.3% ZU3560.038.6%26.83.3%1.6%184.4119.813.88.6% NILE402.769.2%16.59.2%2.1%43.323.648.015.4% LITB411.471.1%N/A -7.7%N/A 6.326.7% GAIA178.183.1%N/A -23.4%N/A 1.99.8% Max356086.1%26.89.2%5.7%184.4119.848.026.7% Media n 407.174.2%17.43.1%0.4%43.326.25.49.2% Mean909.8270.9%18.64%-3.8%78.348.913.111.3% Low178.138.6%12.90.6%-23.4%7.323.61.90.3%

14. Value Weighted Index

15. Conclusion Overstock.com Inc. (NYSE:OSTK) Overstock.com Inc. will be further researched based on the following facts and trends: 1.Increasing marketing spending as percentage of revenue will increase customer base 2. High ability to keep up with new technological trends with introduction of bitcoin 3. Healthy financial metrics -Company has very favorable profit margin which is higher than industry average -Marketing as % of revenue expected to increase in the future