<A Mark C. Layton>: Yeah.
<Q George Walsh>: Yeah, Retail Connect, that is going to be Supplies Distributors plus
clients like P&G?
<A Mark C. Layton>: Thats correct. Yeah, so basically were using a buy/sell model or a
product ownership model, well combine that together in that piece of the segment going forward to
the extent that right now the retail component of it or the consumer piece of it is relatively
small in contrast to the size of the business-to-business piece. As that retail component grows, we
may break it out again and just report business-to-business and retail separately. Right now, it
didnt make any sense to do that. So, youll see basically two key segments going forward; the
PFSweb Services segment, which well target 25 to 30 points gross margin on and then the what we
call Business and Retail Connect segment, which is the buy/sell or product ownership model. So
youll see product revenue in that segment and youll see margins in the low single digits for now.
<Q George Walsh>: Okay. But its the same business right?
<A Mark C. Layton>: Yeah, it is. Yeah, were just repackaging the thing and then whats
left of the eCOST subsidiary that we renamed PFS Retail Connect is not that large at this point.
So, it just makes sense given the similarity of the buy/sell model to segment report those
<Q George Walsh>: Okay. Very good.
<A Michael Willoughby>: And George just to add a little bit to that, remember that with
these relationships such as the P&G relationship, certain activities that we do for them are
billable under our normal fee basis, such as delivering platform and marketing services. So if
youre trying to sort of size the P&G deal, you have to put the two things together and that we
believe will be consistent with the CPG engagements where certain activities including possibly
some of the product sales would be on a consignment basis and would be under the traditional
Service Fee revenue column and certain activities in that buy/sell. So dont try to back into the
P&G deal just by looking at that one aspect.
<A Mark C. Layton>: Yeah, I mean...
<Q George Walsh>: Okay, thats good. So there are service elements and the inventory
buy/sell elements, Mark?
<A Mark C. Layton>: Yeah, if you want us to confuse you more, the other thing that Ill
add is things as well as that a lot of these CPG clients like the concept of launching using the
buy/sell model, but over time may transition into the services model in change. So the product
revenue would go away. Were pretty agnostic in terms of how that happens. We should be able to
earn a similar gross margin, or similar operating income regardless of which model that they use
out of that. So, I think you will see lifecycles of clients change and move between those things as
they go forward, sometimes clients that are all services come with a project that the easiest way
for us to implement its in a buy/sell model. So, its just the flexibility of what were doing and
it will be reported in both places. So, product revenue can be a bit misleading in terms of looking
at that component of it. Id focus on Service Fee revenue growth and then on operating income or
EBITDA, Adjusted EBITDA performance. So...
<Q George Walsh>: Okay. And last quarter I think you mentioned a little bit the there
might be some acquisitions you could be looking at in terms of adding to your capabilities on the
services side, is there anything on that front to report are you thinking there?
<A Mark C. Layton>: Nothing in the hopper at this point. I think Ive talked a little bit
about the interactive marketing services area, or a piece of business that we began to call digital
connect now, but its our digital agency piece. I think there if we found the right opportunity in
there, thats an