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This story by Barbara Fox was published in U.S. 1 Newspaper on August 12, 1998. All rights reserved.
Just Balls? That's It, But the Concept Is on a Roll
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Balls & More: The Company also boasts a brassy new Internet
Baseball, basketball, billiard, bocce, bowling, cage ball, cricket, croquet, field hockey, football, and frisbee. Golf, hammer throw, handball, hurling balls, ice hockey, jai-alai, juggling, lacrosse, mini-squash, netball.
Paddleball, pickle ball, ping pong, platform tennis, polo, racquetball, rugby, shot put, soccer, softball, squash, stickball, street hockey, tennis, tetherball, volleyball, wallyball, and water polo.
Balls for all these sports -- a $2.4 billion market last year -- can now be bought in cyberspace. Princeton's latest contribution to electronic commerce will be the world's first and only retailer specializing in sales of balls over the Internet (http://www.justballs.com).
Named Justballs! this niche business is more than just a virtual company. Founded by five well-credentialed 40-somethings -- including the former licensing manager for the NBA, a former vice president of Foot Locker, and the former director of inventory control at Tiffany's -- it has opened an office on Route 27 in Kingston and has contracted with a well-established fulfillment house.
It also has just bagged an impressive lead investor, David S. Wetherell. Wetherell is chairman and CEO of Massachusetts-based CMG Information Services and holds majority stakes in Lycos and GeoCities plus investments in Adsmart, Engage Technologies, and more. Together, his firms exceed all but Microsoft and America Online in Internet traffic. He was labeled in Business Week last month as a "web giant" with "a knack for picking hot Net spots."
"Our concept and mission of becoming the Number 1 source in our category have received a ringing endorsement from one of the most respected and successful individuals in the Internet marketplace," says Jim Medalia, the president. He plans to open a beta test site on August 15 and actually begin selling online on September 1.
Medalia invokes a comparison of his firm to Amazon.com, known for putting the book business on the Internet. "At the core of our website are product search and user-profiling features that behave like a knowledgeable coach and seasoned sales pro rolled into one," says Medalia, "matching the right products to the customers' needs, 24 hours a day, seven days a week."
Justballs! targets both ends of the market -- colleges and consumers -- and this virtual firm intends to do a better job than any retail and wholesale supplier available now. No one wholesale supplier stocks all the different brands of balls that colleges and other institutions need. Justballs! will. Among its first clients are the College of New Jersey and Princeton Community Tennis; the firm will be the exclusive supplier for all their ball needs.
"The tennis program is a perfect example," says Josh Worby, marketing vice president. "They need five different makes and models of tennis balls. They were using three different suppliers, couldn't get timed shipments, don't have the staffing to price-shop, and don't have storage. We gave them a price guarantee and we time their shipment; the computer can tell the fulfillment operation to pack and ship."
As for the consumer, few retail sporting goods stores stock a good inventory of balls (which are low margin items) and the big-store retail clerks can't be counted on to give expert advice. In contrast, Justballs! will boast an amazing inventory and will handhold the customer through the selection, thanks to its virtual search software.
"The search function is the centerpiece of our store," says Medalia. "You don't even have to know the right questions to ask." Age appropriate is a key term, because most parents don't know that there are different sizes to choose from. Say you're searching for a basketball for a nine-year-old girl. (This is not a random example: All of the principals at this company have daughters entering the third grade.)
For instance, if you tell the Justballs! search engine that you are looking for a basketball, it asks "Who's playing? Age? Sex? Surface?" and all the other questions you might not know to ask. It presents you with a listing of products -- brand name, item description, and price -- that match the criteria you entered. Click on any one of them and you get a full color digital image, a description, the price, and the ability to buy it.
"This is a tremendous tool for a `soccer mom' who may be intimidated to ask a question at the retail store," says Worby. "Our site will hold her hand. At another level, a low handicap golfer who knows his dimple designs can power search straight down to the precise golf ball he wants."
The partners expect to flick the On switch on their website on August 15 or 22. The current inventory of 800 items from 51 suppliers, from Adidas to Xara, is supposed to climb to thousands of items in a couple of months and tens of thousands thereafter. With five full-time employees now, plus part-timers, they plan to expand to 20 people by the end of this year. "If the financial model in our business plan holds 70 percent true, our growth will be relatively quick," says Worby. "We will need to find new digs, new people, and probably get more money."
Price point? Competitive but not guaranteed lowest. By the time you pay for shipping, the price will be more than at a big box store. You're paying for convenience, selection, and expertise. "We can't possibly match the buying power of a Wal-Mart, but they can't offer our breadth and variety," says Worby. "They have five kinds of basketballs, but we have 50. For Internet commerce, as long as the customers can get a competitive price they are happy."
Competition? Worby says he would worry about competition from the manufacturers' own websites if balls had a higher markup. "But Spalding is not going to ship a single basketball."
As for retail competition, Justballs' press kit pointedly includes this quote from Jack Smith, CEO of the Sports Authority, attributed to a New York Times story last spring: "We don't see a reason to make much of an investment in the Internet. I don't really believe the Internet is the wave of the future for sporting goods." That's just the kind of talk Medalia likes to hear.
JustBalls! has both local and virtual business advisors: John Stoddard of Drinker Biddle & Reath on College Road is the firm's attorney, and Scott Pannepacker of Lear & Pannepacker on Ewing Street is the accountant. Deborah Tipermas and her high-school-aged son, Jonathan, are working on data entry and research. Tim Brennan, managing director of Connecticut-based Business Plans International did the business plan. The website was programmed by InfoMech, based in Alexandria, Virginia, which integrates product databases with website architecture. Freelancers in Arizona and New York City did the design and the copywriting. John B. Evans (founder and chairman of biztravel.com and Daryl Peck (founder/CEO of Cyberian Outpost) are on the advisory board.
CEO and president Medalia was son of a research chemist and an educator, who grew up in the Boston area, majored in film at the University of Cincinnati, and worked in Manhattan for 20 years. "I didn't wake up and say, O Boy, I am going to sell balls on the Internet," says Medalia. "We were building Internet sites for our clients, but it was very hard to control a client who wasn't aware of the work he had to do. We decided we would build them for ourselves."
His wife, Hong-Kong born E-Ping, is trained as both an attorney and an electrical lighting designer. Her title now is director of technology and web development. They have an eight-year-old daughter. The husband-wife team has started several businesses together but this one is different, says Medalia, because of its major investors: "We were perpetually underfinanced for any other business we had ever had," says Medalia, "and we decided not to be underfinanced."
It is different from most other Internet companies, he says, because all of the companies principals are mature. "We all have families, and that probably isn't the norm on the Internet," says Medalia. All live in the Princeton are and are happy to avoid the Manhattan commute.
Joshua Worby, vice president of marketing, learned the ins and outs of sports retailing when he was licensing manager of NBA Properties. The son of an English teacher and a hardware manufacturer, he majored in music (clarinet) at State University of New York at Potsdam, Class of 1977, and studied stage directing at Columbia. After five years he left the theater world to work at such firms as Digital Equipment Corporation and Price Waterhouse. For the NBA he was in charge of rights for all 29 teams, plus all active and retired players, in connection with sporting goods, gifts, accessories and collectibles. The licensed account base that he managed generated over $150 million annually, and he was a key player in launching programs for the Olympic "Dream Team" and the WNBA.
Steven J. Gerke's claim to fame is being on the four-person team that started the Lady Footlocker stores. A graduate of Gustavus Adolphus College in Minnesota (Class of 1979) he spent 18 years with the Foot Locker organization, the $2l5 billion retailer of sports footwear and apparel. Most recently, as vice president, he led financial planning, budgeting, brand strategy, and vision for the business at 1,600 stores. Now he is vice president of merchandising.
Medalia spotted Joe Ruggear, vice president of logistics, from his job-wanted ad in U.S. 1. An alumnus of Villanova, Class of 1976, he had been director of inventory control for eight years at Tiffany and Co. With a staff of 30, he integrated merchandise processing, order entry, and distribution systems; he helped reengineer Tiffany's merchandising business processes. Before that he was director of expense and inventory control at Gimbel's and was a consultant for Senn Delaney Management Consultants.
Ruggear has selected the Jay Group to do its fulfillment. Located in Lancaster, Pennsylvania, this 32-year-old company has 200 employees and more than 365,000 square feet of warehouse space. "They have the technical sophistication and servicing savvy to adapt their systems to Internet retailing," says Ruggear, "which is still an evolving discipline with few usable models and fewer existing infrastructures.
In addition to the cyberstore, the website will be a place to learn, hang out, and have fun. The JB! Clubhouse will have discussion forums for individuals and coaches, equipment swap bulletin boards, postings for community events, and player matching. The Ball Authority will have game rules. A Players Lounge will offer games and contests.
Marketing campaigns will target coaches, administrators, and volunteer parents who make purchasing decisions and will involve pricing and service options for even the smallest group. Even a community soccer league will be able to create a dedicated page for posting scores, standings, player stats, and local news updates "at no incremental charge," says Medalia. The firm also will merchandise to women and girls.
Frequent buyer programs and specials will control inventory, test new products, move close-out goods, and react instantly to sports news and events.
Worby plans a public relations campaign to get his company into lifestyle magazines (such as GQ, Men's Health, Self, and Seventeen), sports magazines (Sports Illustrated, Sporting News), and general news. He also needs to reach out to the wired and Internet community "so they understand who and what we are" and to the manufacturing community "notorious for resisting change and for wanting to keep to the old traditional model."
"Coming out of the box it will essentially be a PR campaign," says Worby. "Once we have a revenue stream we will do a hard advertising campaign, buying keyword purchases online."
Through SCORE (Sportsmanship Community Outreach for Recreation and Enjoyment) the firm will make charity donations of equipment to disadvantaged after school programs.
One way to summarize the Justballs! business plan is to finish enumerating its product list. It turns out that Justballs! is not really going to have "just balls" after all. Balls will be the horizontal niche market, but eventually the firm could create vertical markets in each sport. You're buying our field hockey balls? Now buy our field hockey sticks. And so on.
For now balls will dominate the inventory, but even now the firm offers ball-related items: ball bags, ball machines, ball pumps, golf tees, pressure gauges, coaches aids, ball racks, shag bags, ball carts.
Then there are the collectible balls, display balls, promotional balls, dexterity balls, Oriental health balls, squeeze balls, medicine balls, ball 'n jacks, bouncing balls, beach balls, and foam balls.
Did we forget some? How about the Gertie balls, glitter balls, juggling balls, marbles, mini balls, nerf balls, plastic balls, soft touch balls, safety balls, training balls, tee balls, and the whiffle balls, and oh yes, the pet balls.
Another way to evaluate this business team is to compare it with others in its league. If JustBalls makes its goals in the ball business, it will be in field position for success with other niche E-commerce markets. "We expect to become experts where none exist," says Worby. "We expect to have value, but we will let the market decide what that will be."
-- Barbara Fox
This page is published by PrincetonInfo.com -- the web site for U.S. 1 Newspaper in Princeton, New Jersey.