Case | HBS Case Collection | 2000 (Revised from original 1999 version)

drugstore.com

Abstract

On a clear day in August 1999 in the new headquarters of drugstore.com, against a backdrop of the Blue Angels flying in formation over Lake Washington practicing for their hydroplane Seafare Cup performance, Peter Neupert was pleased with his company's IPO performance. Just last month, on July 28, 1999, drugstore.com had burst to life as a public company. Shares priced at $18 had soared as high as $69 on the first day of trading, providing a total valuation for drugstore.com of more than $2.9 billion--and a record: drugstore.com was the fastest company ever to reach a valuation of $1 billion. The team had built a virtual drugstore on the Web. During the first six months of its existence more than 160,000 customers had come to shop for more than 17,000 drugstore products and prescription drugs. Customer orders were electronically sent to distribution centers run by Walsh Distribution and RxAmerica, both located in Texas. Drugstore.com had entered into outsourcing agreements/partnerships for fulfilling the orders with these two firms. For six months ending July 4, 1999, drugstore.com sold products to approximately 168,000 customers, and had net sales of $4.2 million with an operating loss of $30 million. In June of 1999, drugstore.com had 980,000 unique visits to its Web site compared to 560,000 unique visits of its competitor PlanetRx.

Keywords: Internet; Goods and Commodities; Health; Problems and Challenges; Business Startups; Corporate Finance; Retail Industry;

Language: English

Format: Print

23 pages

Purchase

Citation:

Nolan, Richard L. "drugstore.com." Harvard Business School Case 300-036, April 2000. (Revised from original September 1999 version.)

Being a great leader today is much harder than you think—meet Jim Barton. He's a newly minted CEO, rising leader of a firm in transition, and manager of massive complexity—thanks to our incredibly networked and increasingly unpredictable world of business. What if you were in his shoes? If you're a top executive today, you probably are. "Harder Than I Thought" is a fictional narrative that puts the increasingly complex job of Chief Executive in a very real context. It serves as a practical guide by allowing you to walk alongside Jim as he takes on his new role and all its attendant challenges. Jim's story—developed in collaboration with seasoned, real-life CEOs—includes crucial lessons for anyone hoping to master the new-world skills required of successful business leaders today. As the narrative unfolds, Jim grapples with an array of business crises, some he inherited and some of his own making. As events push this new leader to the edge of his abilities, he seeks counsel from a panel of advisers—resulting in a wealth of teaching moments bound to keep you captivated. Experts agree that many twentieth-century leadership practices won't work in the turbulent twenty-first century. This engaging book gives you the insights you'll need to navigate in a fast-changing business landscape.

The CIO addresses a decision to replace salesmen netbook PC's with iPhones, including converting the company's sales and customer applications to the iPhone platform

Technology management poses particular challenges for educators because it requires a facility with different kinds of knowledge and wide-ranging learning abilities. We report on the development and delivery of an information technology (IT) management course designed to address these challenges. Our approach is built around a narrative, the "IVK extended case series," a fictitious but reality-based story about a newly appointed, not technically trained chief information officer (CIO) in his first year on the job. We designed the course around a narrative and composed the narrative in a specific way to achieve two key objectives. First, this format allowed us to combine the active student orientation typical of case-based approaches with the systematic construction of cumulative theoretical frameworks more characteristic of lecture-based methods. Second, basing the narrative on the monomyth-a literary pattern common to important narratives around the world that encourages students to more fully inhabit the story's hero-leads to fuller engagement and more active learning. We report results using this approach with undergraduate and graduate students in two universities located in different countries, with executives at a major multinational corporation, and with participants in an open-enrollment program at a major business school. Student course feedback and a follow-up survey administered about one year after the course suggest that the extended narrative approach mostly achieves its design objectives. We suggest that the approach might be used more widely in teaching technology management, particularly with "digital natives," who have come of age in an environment crowded with engaging approaches to communication and entertainment competing for their attention.

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