<A Mike Willoughby>: Well I suppose what I could do is to discuss how the categories or
the vertical markets they tend to fall in. Our number one vertical market has been over the past
three or four years the fashion apparel and accessories. And the majority of the clients in our
pipeline are still in that category, so thats definitely our most active and most lucrative
vertical market. Right now, I would categorize that the second category is probably a pretty
virtual tie between the CPG companies both the non-food and the food packaged goods categories and
the health and beauty vertical market. So, between those three, you probably have 90% or so of the
prospects in our pipeline and the remainder would be B2B opportunities or product categories
outside of those three verticals like toys or consumer electronics.
<Q Marco Rodriguez>: Helpful. And then, lastly if you can kind of talk a little bit more
about your sales and marketing. Are you seeing more people come to you asking for that End2End
solution kind of the soup-to-nuts, if you will, or are people just kind of coming or not sure
exactly what to do with our eCommerce solution, help us out?
<A Michael Willoughby>: What we are seeing typically now is that companies want to
understand all of the alternatives that they have. And so we are seeing less of preconceived notion
or assumptions coming in that they would like to have the contract relationship one way or the
other. And so, we are in a position now because of the flexibility of our solution to talk to them
about the single provider or the one throat-to-choke benefit that comes from that End2End solution.
But were also able to say if you want to contract directly with Demandware, for instance, or you
want to use your in-house fulfillment capabilities, how easy it is for us to offer our solution in
à la carte fashion and create the same kind of End2End synergies by integrating with another
third-party or an internal capability. So just being able to speak to that flexibility without sort
of railroading the prospect down a certain avenue, I think, gives us a lot of power in our sales
<Q Marco Rodriguez>: Thanks a lot guys.
<A Mark C. Layton>: Hey Marco, one thing I want to clarify real quick and Ill let Tom
just give you a little bit more detail on that, back to your first question in the terms of the
magnitude of the investments we are marking. We have got roughly $18 million. Well, go ahead, Tom.
<A Thomas J. Madden>: Yeah. Weve got about as Mark indicated, our targeted growth is
about 20% on our Service Fee business. So if you took that 20% on our $70 million Service Fee
revenue base this year, thats about a $14 million increase in Service Fee revenues would be what
we would be targeting. Of that $14 million, we would be expecting to earn a gross margin of 25% to
30%. So were going to have the incremental cost of goods sold for that new business activity. What
my point was earlier was on top of that normal cost of goods sold component, we expect to have an
additional several million dollars of cost that were making from an investment standpoint in the
business just for not only our initiative this year as well as our long-term growth.
<A Mark C. Layton>: Right. So you take the $10 million or so cost of goods in that number
plus a couple of million more, the magnitude answer I think you were after in terms of the
investments that were making in people and infrastructure and so on and so forth is well in excess
of $10 million for the year.
<Q Marco Rodriguez>: Okay. So the revenue increase is going to offset the increase in
<A Mark C. Layton>: Thats correct.
<Q Marco Rodriguez>: Got it. Great. Thanks a lot guys.
Operator: Your next question comes from Alex Silverman of Special Situations Fund.
<Q Alex Silverman>: Hey, guys. How are you?