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and generally stock for sale the same day. On behalf of our clients, we pick,
pack and ship their customer orders and can provide customized packaging,
inserts and promotional literature for distribution with customer orders. Based
upon our clients' needs, we are able to take advantage of a variety of shipping
and delivery options, including next day service. Our extensive use of advanced
technology and equipment in our distribution centers enable us to generally
maintain an order accuracy rate of nearly 100% and, similarly, ship nearly 100%
of in-stock orders the same day. In addition, an increasingly important function
that we provide for our clients is product return administration. We offer a
wide array of product return services for our clients, including issuing return
authorizations, receipt of product, crediting credit card accounts, and
disposition of returned product.
During the fiscal quarter ended March 31, 1999, we warehoused, managed and
fulfilled over $450 million (on an annualized basis) in client merchandise and
transactions. This does not represent our revenue, but rather the revenue of our
clients for whom we performed transaction management services. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
CLIENTS AND MARKETING
Our target clients include traditional manufacturers of brand name products
looking to quickly and efficiently implement e-commerce initiatives or introduce
new products or programs, without the burden of modifying or expanding their
order processing and distribution infrastructure. We also target retailers
seeking to open Web sites to expand their sales without opening new brick and
mortar stores and distributors seeking to reduce costs. Our services are
available for a variety of industries, including:
- MANUFACTURERS such as IBM (printer and media supplies), Emtec (formerly
BASF Magnetics) (data media and audio visual products), Tektronix
(printers and printer supplies), Thomson Consumer Electronics
(televisions and consumer electronics), Hewlett-Packard (computer
networking equipment) and Nokia (cell phone accessories);
- RETAILERS such as American Eagle Outfitters (fashion apparel) and Global
Sports Interactive (a sporting goods distributor for SportsAuthority.com,
AthletesFoot.com, MCSports.com, Sportchalet.com, Sportsandrec.com and
other retailers);
- DISTRIBUTORS such as Daisytek (consumable computer supplies), ISA Ltd.
(computer and office supplies in Western Europe); and
- INTERNET COMMERCE SITES such as RCA.com (television sets and consumer
electronics), Lyrazone.com (MP3 players), NokiaUSA.com (cell phone
accessories), BargainBid.com (on-line auction) and YardMart.com (lawn and
garden products).
During the six month period ended September 30, 1999, we also provided
services for Encad, Inc., Apple Computer (Apple Supplies Express) and Exabyte
Corporation (although this represented collectively approximately 1% of our
total revenue for such period).
We reach these clients through a direct sales force, telemarketing, trade
shows, trade journal advertising, our Web site and direct mail programs. We also
pursue strategic marketing alliances with Web design firms and e-commerce
consultants to provide referrals and customer leads.
Our direct sales force is comprised of dedicated sales professionals whose
compensation is tied to their ability to expand our relationships with existing
clients and attract new clients. We also employ highly trained implementation
managers whose responsibilities include the oversight and supervision of client
projects and maintaining high levels of client satisfaction.
All of our product revenue for fiscal 1999 was generated by sales of
product purchased under master distributor agreements with IBM. On an historical
basis, Daisytek accounted for 13% of our
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