Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 79

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 4A
Chunk 79
---
 third-party logistics services; (ii) inbound and outbound freight
costs; and (iii) inventory write-offs relating to refurbished, slow-moving and obsolete inventories and adjustments for vendor incentives
related to inventory still on hand at the reporting date.

Cost of sales is partially offset by payments
we earn under vendor incentive programs (“ VIPs”), such as purchase rebates, marketing development funds that vendors give
us to advertise their products, cooperative marketing programs jointly funded with vendors, and price protection refunds to offset reductions
in the manufacturer’s suggested retail price. These VIPs are sometimes tied to the volume of our purchases or sales and represent
an indirect or effective reduction of the selling price of the suppliers’ products. Therefore, we treat these program payments as
reductions to cost of sales.

The following table sets forth the components
of our cost of sales, in absolute amounts and as percentages of total net sales, for the periods indicated.

                                                       For the Year Ended December 31,                                                                                
                                                       2024                                                                                                           
                                                       (in millions, except for percentages)                                                                          
  Cost of sales                                        Amount                                                                                                         
 ──────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────
  Purchase price of goods sold by us directly          $                                            987.9       89.5      1,227.5       92.3      1,405.0       93.4  
  Costs related to Marketplace & service revenues                                                    72.7        6.6         50.9        3.8         49.4        3.3  
  Inbound and outbound freight costs                                                                 40.8        3.7         48.1        3.6         49.2        3.3  
  Inventory write-downs                                                                               4.2        0.4          5.0        0.4          6.0        0.4  
  Release of inventory reserves                                                                      (1.5       (0.2         (2.1       (0.1         (6.0       (0.4  
  Total                                                $                                          1,104.1      100.0      1,329.4      100.0      1,503.6      100.0  

Selling, General and Administrative Expenses

The largest component of our selling, general
and administrative expenses (“ SG