"Our active customer base, which we define as customers who have purchased from us within the last 12 months, has steadily increased from approximately 270,000 at the end of 2005 to approximately 957,000 as of June 30, 2009. For the first and second quarters of 2009, our per-customer acquisition cost, determined by dividing our acquisition-related marketing costs by the number of gross new customers, was $10.16. On average, our customers make purchases from us two to three times a year, and over the last twelve quarters, our average order value has ranged between $72 and $77. Our 2008 customer surveys reveal that over 95% of respondents are likely to reorder, citing as key factors our product selection and quality, competitive prices and speed and accuracy of shipment. During the first and second quarters of 2009, approximately 49% of our orders were placed by repeat customers. We began operations in 1994 as a catalog retailer of third-party vitamins and supplements under the name Nature's Wealth Company. In 1999, we launched Vitacost.com and introduced our proprietary vitamins and supplements under our NSI brand. In 2000, we began operations under the name Vitacost.com, Inc. During 2008, we began manufacturing certain proprietary products in-house and currently have the capacity to produce in excess of one billion tablets and capsules annually. Since our inception, we have shipped over ten million orders to our customers."
"We rely upon third-party suppliers for certain ingredients and raw materials. The principal ingredients or raw materials required in our operations are vitamins, minerals, herbs and packaging components. We purchase these materialsfrom third-party suppliers located in the U.S., Japan, China, India,Italy, Spain, France and Germany.Furthermore, although we manufacture most of our proprietary productsin-house, we engage third-party manufacturers to produce ourproprietary products that are in the form of soft-gels, liquids andpowders. As of August 31, 2009, four third-party manufacturers provided approximately 13% of our finished soft-gel, liquid and powder products. No single third-party manufacturer, however, manufactured more than 6% of such products."
"In April 2008, we completed construction of our manufacturing facility located in Lexington, North Carolina. We currently manufacture approximately 72% of our proprietary products at this facility. In the future, we expect to manufacture substantially all of our proprietary products. Prior to commencing manufacturing at this facility, we relied upon third-party manufacturers to manufacture all of our products. Therefore, prior to April 2008, we had no experience in manufacturing."
Net sales increased from $30 to $144 millions from 2004 to 2008. Operating income was 1.2% of net sales in 2008.
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Edited by Blue, 16 September 2009 - 10:17 AM.