Company: NEGG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001213900-25-036055
Chunk: 5

Company: Newegg Commerce, Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 5
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 in reduced operating margins,
reduced profitability, loss of market share and diminished brand recognition for Newegg.

We compete with online retailers such as Amazon
and traditional retailers like Best Buy and Walmart, who sell through brick-and-mortar stores and their online websites. In addition,
we also face competition in the international markets in which we participate or may enter in the future. Certain other competitors in
countries where we operate are subsidiaries of e-commerce competitors in the United States with established local operations and brands
and with greater experience and resources than we have. In other countries that we may enter, there may be incumbent online and multi-channel
online or brick-and-mortar competitors presently selling Information Technology/Consumer Electronic (“ IT/CE”) products. These
incumbents may have advantages that could impede our expansion and growth in these markets.

We could also experience significant competitive
pressure if any of our manufacturers or distributors were to initiate or expand their own online or brick-and-mortar retail operations.
Because our manufacturers and distributors have access to merchandise at a lower cost than we do, they could sell products at lower prices
and maintain a higher gross margin on their product sales than we can, and they may have the ability to directly connect with buyers at
relatively low cost. This could result in our current and potential buyers deciding to purchase directly from these manufacturers and
distributors instead of from Newegg. Increased competition from any manufacturer or distributor capable of maintaining high sales volumes
and acquiring products at lower prices than we can, could significantly reduce our market share and adversely impact our operating results.

There is no assurance that we will be able to
compete successfully against current and future competitors. Competitive pressures may materially and adversely affect our business, financial
condition and results of operations.

A decline in demand for IT/CE products could
adversely affect our operating results.

We and our Marketplace sellers primarily sell
IT/CE products that are often discretionary purchases rather than necessities for consumers. Consequently, our results of operations tend
to be sensitive to changes in macroeconomic conditions and their impact on consumer spending. Factors including customer confidence, employment
levels, conditions in the residential real estate and mortgage markets, access to credit, interest rates, tax rates, customer debt levels
and fuel and energy costs could reduce customer spending or change customer purchasing habits in ways that materially and adversely affect
demand for the products that we and our Marketplace sellers offer.

There could be declines in the sales of the products
offered by us and our Marketplace sellers due to