Turning a Failure into an eB2B Success
Success is often achieved as a result of a failure. Successful entrepreneurs experience failure as a normal part of growing a business; it is an essential part of the development process. In 2000, Michael A. Berman joined the public Internet-based supply chain management company, eB2B, as Vice President of Sales and Client Services and quickly moved up to the position of Executive Vice President, COO and General Manager. Within one year, he repositioned the Internet start-up company from its original aspiration as a provider of sporting equipment and supplies to an Internet outlet for regional retail pharmacies.
Mike Berman had already led several successful company transformations, but none had involved Internet business. When he joined eB2B, they had $40 million in investment money and a business plan certified by McKenzie Corporation. Their business plan looked good on paper and was structured to provide an Internet-based platform for selling sporting goods.
Their first objective was to secure the supply side. They contacted existing name brand suppliers like Nike and Adidas, but were unable to persuade them to market their product through their Internet platform. Without the name brand suppliers, they were unable to succeed. Internet customers of sporting goods are highly unlikely to purchase “off brands” because they cannot be certain of quality. For Internet sales on sporting goods, the power shifts to the “sales side.” Customers generally prefer to purchase reputable products based on name identification. Without the name brand suppliers, an online sporting goods sales platform was doomed to failure.
Mike did not want to throw in the towel. He examined the e-business model and platform and set out to find a business on which it would work. He needed suppliers with products that could be marketed based on price and convenience, which the Internet could satisfy. Retail pharmacy offered just the right platform. They took their proposition to CVS, Rite Aid, and regional players like Plainview in New York. These retail pharmacies were all comfortable with Internet sales because they all purchased through suppliers like Johnson & Johnson, Pfizer, and Merck.
The eB2B business platform was a good match for the retail pharmacy business. They were able to build up their eB2B business and sell it twice. Although Michael A. Berman set out to create a blockbuster star in Internet sporting goods sales, he ended up building a supporting actor that generated a nice, $20 million, $30 million, or $40 million in annual revenues. Through this experience, Mike learned that the Internet is more like an enabling tool rather than the mechanism for success itself. And failure sometimes leads to success.