Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 77

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 4A
Chunk 77
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 mix between direct sales and Marketplace. This is primarily due to the difference
in revenue recognition - we recognize revenues from direct sales on a gross basis, while we recognize revenues from the
Newegg Marketplace on a net basis. See “ - Key Components of Results of Operations” for details. Accordingly, for
the same amount of GMV, direct sales generates more net sales than Marketplace and, therefore, an increase in the GMV contribution of
Marketplace as a portion of the total GMV would have a negative impact on our net sales.

Newegg’s ability to forecast consumer
needs and preferences

The IT/CE e-commerce market in North America and
globally is characterized by rapidly evolving technologies, fast-changing consumer requirements and preferences and frequent releases
of new products and introductions of updated industry standards and practices. We must effectively respond to these changes to remain
competitive. We may have difficulty anticipating consumer demand and preferences, and the goods offered on our online platforms may not
be accepted by the market or may be rendered obsolete or uneconomical. Our inability to adapt to these developments may lead to excessive
or deficient inventories or a failure to attract new customers and retain existing customers, which could materially and adversely affect
our financial condition and results of operations.

Newegg’s ability to source products
from key suppliers on favorable terms

As of December 31, 2024, we offered over
73,500 direct sales SKUs sourced from at least 315 suppliers globally. We maintain extensive, long-standing and mutually beneficial
relationships with many of the biggest tech product brands and distributors globally. However, our contracts or arrangements with such
suppliers generally do not guarantee the availability of merchandise or provide for the continuation of particular pricing or other practices.
Our suppliers may not continue to sell their inventory to us on current terms or at all, and, if the terms are changed, we may not be
able to establish new supply relationships on similar or better terms.

We compete with other retailers and direct marketers
for favorable product allocations and vendor incentive programs from product manufacturers and distributors. Some of our competitors could
enter into exclusive or favorable distribution arrangements for certain products with our vendors, which would deny us complete or partial
access to those products and marketing and promotional resources. In addition, some vendors whose products are offered on our online platforms
also sell their products directly to customers. If we are unable to develop and maintain relationships with suppliers that permit us to
obtain sufficient quantities of desirable merchandise on favorable terms, our results of