SEC Filings Section 16 Filings Only
 
PFSWEB INC filed this 8-K on 03/28/2011.
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<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 that’s 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 we’re 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 cycle.
<Q — Marco Rodriguez>: Thanks a lot guys.
<A — Mark C. Layton>: Hey Marco, one thing I want to clarify real quick and I’ll 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. We’ve 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, that’s 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 we’re 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 we’re 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 we’re 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 cost?
<A — Mark C. Layton>: That’s 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?

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