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These articles were published in U.S. 1 Newspaper on September 8, 1999. All rights reserved.
On the Ball in E-Commerce
Two entrepreneurs who have staked their fortunes on
E-commerce spoke at U.S. 1’s technology forum last week at the Doral
Forrestal. Jim Medalia, CEO of Kingston-based
Justballs!, is selling equipment for sports activities. Ed McLaughlin,
CEO of Emmons Drive-based Secure Commerce Services, offers online
bill presentment and payment at Paytrust.com. The seminar was part
of the all-day trade show and technology
expo jointly sponsored with the Princeton Chamber.
Internet commerce can’t be compared to anything else, said McLaughlin.
It’s not like anything we have ever seen before. The Internet empowers
the consumer and blurs all the traditional lines on how the product
gets to the end user, said Medalia. It offers 24-hour,
seven-day-a week convenience, limitless selection, and dependable
"But time is the Internet merchant’s enemy," said Medalia.
"It is better to learn from your mistakes than to wait for others
to enter the field and then do a counter punch. Put something up and
then continually fix it."
Medalia has the world’s only website devoted to selling balls and
has been proclaimed one of the top retailers online. To pursue market
share, he said, you need to spend money. His market, for instance,
is worth $2.3 billion in the United States alone. "If it costs
me $50, for instance, to acquire a customer, and if I can prove that
the total amount spent is $300, and my margin is
50 percent or $150 profit — that means I make three times what
I spend," said Medalia. "As long as that is a positive number
I will spend any penny I can beg, borrow, or steal."
McLaughlin helps consumers reduce the paper pile. "Tell us who
your billers are, and what the account is, and we will do almost
else for you," McLaughlin said. For one monthly fee, $7.95, you
authorize up to 25 payments on your personal, secure web page, and
your bills are stored there for instant access. E-mail tells you that
the bill has arrived, and you can deal with it then or anytime. You
log into a secure area, the Paytrust bill center, and review the bill
and/or pay the bill. Whenever you want to check a bill, it’s on the
Internet for you to view, whether you are traveling or at home. You
can authorize prepayment or pay each bill separately. Your payments
will tap your bank account on the day you specify, and you can set
up quarterly payments ahead of time, avoiding late charges.
"Because we are working for the consumer, we can work with any
bank or biller, and we are working with over 400 billers and every
major bank in the region," said McLaughlin. "We have already
paid over $1 million worth of bills."
Medalia spoke of how he decided which E-commerce market to pursue.
He compared books (Amazon.com) and music (CDNow) to the sporting goods
industry and found that all three were large, mature markets, and
that they were fractured markets. What made them particularly
appropriate for E-commerce were three characteristics of the products:
available in bricks and mortar stores;
benefit from extensive pre-purchase information, the kind not usually
available from in-store salespeople
How do you get people to come to your cyber store? asked one
questioner. Don’t buy banner ads, said Medalia. Instead, get involved
with content and do deals. He has negotiated deals to supply balls to
which is an anchor site for AOL, MSN, Yahoo, and ESPN. Paytrust uses
advertising as well as cyber deals. "We have to
explain Paytrust," said McLaughlin.
What about customer service? Both entrepreneurs handle their own
service call centers, instead of the more usual practice, to contract
Focus on the customer, said Medalia, is why his firm holds its own
inventory and has 97 percent fulfillment (goods shipped out) in less
than 24 hours versus 80 percent, which is the high standard for the
McLaughlin said his firm strongly dedicates itself to the needs of
the consumer rather than of the billers or the banks. Because surveys
say that privacy is a major consumer worry, Paytrust.com sells its
service on a subscription basis ($7.95 a month), eliminating
and therefore maintains strict privacy guidelines. "Privacy issues
drove our entire business model. We don’t sell your eyeballs,"
said McLaughlin. "We keep a maniacal focus on who is the consumer
and we deliver the service to that consumer."
As for technology, Paytrust.com is patenting its scanning system and
is using proven models for back-office payment. Justballs! extensively
customized its inventory software but is not using EDI (electronic
data interchange) with its warehouse facility.
How to get the attention of a funder? A good business plan is a must
but is not enough. Earn your stripes at a venture fair, said the
entrepreneurs, or somehow gain an introduction from an insider.
The Straube Center has a treasure lode of intriguing
tales from the past, but Win Straube wants to showcase the innovative
stories for the future. His center on West Delaware Avenue in Pennington
used to be an iron foundry, but now the tenants are founding new technologies.
His annual open house celebration, always the second Tuesday after
Labor Day, will be Tuesday, September 14, from 4 to 6 p.m. Everyone
is invited; food will be provided by Pennington Market. Call 609-737-8695.
In September 1899, relates Straube, Enoch Knowles and Joseph
Schiller had a meeting of minds regarding a parcel of land, to
transform it into a site for innovation and industry. "Now we
are a beehive of invention," says Straube.
His biography "At the Right Place" by Virginia Persing details
how these buildings hosted a series of tenants who used technologies
current for their time. Knowles and Schiller built it as an iron foundry.
The tenants that followed made, in succession, coal briquettes, braided
copper electrical wire, hard candy, aircraft, prefabricated parts
for hospitals, Cointreau liqueur, and cosmetics.
The briquette chemist, who was run out of town because of the awful
smell he produced, and the candy company was shut down because it
polluted the water supply. Some past tenants suffered reverses that
were merely financial. The cable company, for instance, went bankrupt
when the stock market crashed in 1929. Others were the victim of circumstance:
The Cointreau plant burned down, and somewhere on these acres is a
cache of old, probably broken, liqueur bottles, by now turned to near
Straube bought the property in 1976 and brought in the first tenant
in 1981. On 9.5 acres, eight buildings total 50,000 square feet and
have a vacancy rate of just five percent. Though the 75 tenants include
various health practitioners, an architect, employment and insurance
agencies, a recycling firm, and a sales office, the tenant list skews
dramatically to high tech companies. Some have one-person offices
and others employ as many as 20 people.
"We nurture these kinds of companies in fairly low cost space
in a very high tech environment," says Straube. "The low cost
comes through the efficiency and organization; it is top notch quality."
These "intelligent buildings" are managed by an electronic
concierge and have the very latest wiring. Most companies need super
fast connections to the Internet and can buy into a share of the center’s
T-1 line. Winn Thompson, who markets the property, says that
the smallest office, a 10 foot by 10 foot space, rents for $280 a
month on a temporary basis. Straube’s tenant list also includes these
609-737-2324; fax, 609-737-2453. Home page: http://www.dbacompany.com.
Focusing on financial services and consumer products for Fortune 500
609-737-1110; fax, 609-737-6927. Development and management of national
consumer ad/marketing programs for Fortune 500 clients
609-818-1010. Statistical research for pharmaceutical product development
fax, 609-730-8652. Home page: http://www.vertinews.com. Coverage,
compilation, and delivery of news and research information for professionals.
director. 609-730-0777. Home page: http://www.whitehurstindustries.com.
Multimedia, website, and computer game developer, also Anarchy Entertainment.
fax, 609-737-7528. Home page: http://www.congenomics.com.
Bioinformatics and protein modeling; consulting and software development
for genomics, structural biology, and computational chemistry.
owner. 609-818-1075; fax, 609-818-1076. Home page: http://www.qwikquote.com.
Development and sales of QwikQuote sales quoting software, Electronic
Concierge, Photos by Net.
609-730-9180; fax, 609-730-9663. Home page: http://www.etseesoft.com.
LifeConnect software, 24-hour monitoring of patients in hospital,
also sales force automation software and application localization
for Japanese market.
J. Rizza Jr., president. 609-737-8098; fax, 609-737-3787. "ExpressTrain"
and other electronic learning systems providing interactive classroom
teaching via the web or disks.
Because two past tenants were big-time polluters, it is ironic justice
that two Straube Center tenants now devote themselves to recycling.
Dave Steffens of ERS Imaging Supplies (http://www.ers-imaging.com)
converts empty toner cartridges, and Michael Domino of Domino Plastics
Company (609-737-9600) brokers post-industrial plastic scrap.
Straube points to a shining example of tenant ingenuity, the Product
Development Group founded by Carl M. Stern, http://www.pdgrp.com.
For small and large companies, this consulting firm develops mass
market products — medical, consumer, nontoy infant products, and
toys. Examples of Stern’s work include an infant gate for Fisher-Price,
an infusion pump for Becton Dickinson, an automatic pool cleaner for
Hayward Pool Products, toy trucks for Nylint Corp., and an industrial
soap dispenser for Loctite.
Straube’s favorite: the fire truck that comes with a siren and engine
rumble. Children around the world are hearing the toot-toots and the
vroom vrooms recorded at the Pennington Fire Department.
— Barbara Figge Fox
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