Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 18

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 18
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 depends on the smooth operation of our fulfillment infrastructure, including our warehouses
and order processing centers. If we do not optimize and operate our fulfillment infrastructure successfully and efficiently, it could
result in excess or insufficient fulfillment capacity, an increase in costs or impairment charges and a reduction in our gross profit
margin, or harm our business in other ways. If we do not have sufficient fulfillment capacity or experience a problem fulfilling orders
in a timely manner or if certain products are out of stock, our customers may experience delays in receiving their orders, which could
harm our reputation and our relationship with our customers.

Our fulfillment infrastructure may be vulnerable
to damage caused by fire, floods, power outages, telecommunications failures, break-ins, earthquakes, human error and other events. For
example, in May 2022, our warehouse located in Toronto, Canada experienced a break-in and theft of approximately $3.4 million of inventory.
Our fulfillment infrastructure and processes may also contain undetected errors or design flaws that may cause our fulfillment operations
to fail and materially impact our business and results of operations. If, for example, any of our warehouses were rendered incapable of
operations, we may be unable to fulfill any orders in areas that rely on that warehouse. While we maintain property and business interruption
insurance to protect against losses of this nature, we cannot guarantee that such insurance will be available in the future at terms and
rates acceptable to us, nor can we guarantee that any related insurance claims will be paid out in a timely manner, or at all. The occurrence
of any of the foregoing risks could have a material adverse effect on our business, prospects, financial condition and results of operations.

We rely on a limited number of third-party
courier service providers to deliver our products, and our inability to negotiate acceptable terms with these providers and their failure
to provide high-quality courier services in a timely manner, if at all, to our customers may negatively impact the procurement experience
of our customers, damage our market reputation and materially and adversely affect our business and results of operations.

We rely on a limited number of third-party courier
service providers to deliver products to our customers. For the periods of the fiscal years ended December 31, 2024 and 2023, approximately
95.8% and 85.3%, respectively, of our total packages were shipped by our top three third-party courier service providers. There can be
no assurance that we will be able to maintain or negotiate commercial terms that are no less favorable than