Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 22

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 22
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 that direct visitors to
our online platforms. As of December 31, 2024, approximately 24% of our website and mobile app visitors were referred to us through paid
and unpaid search engine listings, shopping comparison sites and other affiliate networks that provide links to our online platforms.
In particular, we rely on search engines, such as Google and Microsoft Bing and social media platforms, such as TikTok, Facebook and Instagram,
as important marketing channels. Some of these marketing channels, most notably TikTok, have been subject to various forms of data privacy,
regulatory and national security scrutiny, as well as mounting political pressure to potentially limit or restrict the use of such channels.
If such efforts to limit or restrict these channels are successful (such as U. S. legislation that was set to ban TikTok), our ability
to engage and interact with existing and potential customers could be significantly limited, which could in turn have a material adverse
impact on our business results. Further, if search engines or social media platforms change their search engine algorithms periodically
or penalize us for non-compliance with their guidelines while using their algorithms, terms of service, or display and featuring of search
results, or if competition increases for advertisements, we may be unable to cost-effectively drive visitors to our websites and mobile
apps. We also sometimes pay these third parties to include or highlight our websites in their search results. If such third parties modify
or terminate their relationship with us or increase the price they charge to us, if our competitors offer them greater fees for traffic,
or if any free third-party platforms on which we rely begin charging fees for listing or placement, our expenses could rise and traffic
to our websites could decrease, resulting in harm to our operations.

Our success also depends on our ability to convert
visitors to our websites and mobile apps into paying customers, a process which is partially reliant upon our ability to identify and
purchase relevant keyword search terms, provide relevant content on our online platforms and effectively target our other marketing programs,
such as internet portal referrals, email campaigns and affiliate programs. If we are unable to attract visitors to our websites and mobile
apps and convert them into customers cost-effectively, our business and financial results may be harmed.

Because many of the products that we sell
are manufactured abroad, we may face delays, increased cost or quality control deficiencies in the importation of these products, which
could reduce our net sales and profitability.

Many of the products that we purchase for direct
sale on our online platforms are