In vetting potential partners, Raman (Drugstore.com's former CTO) andhis team looked for retailers that shared his company's values andview of the industry. Prospective partners had to be obsessed withcustomer service. "You have to make the relationship successful foryou, your partner and your customers, and you can do that only if youshare a common goal, like customer service," Raman says.

In June 1999, after scoping out the business plans, internaloperations and strategies of several nationwide chains, Raman choseRite Aid. A partnership with General Nutrition Centers (GNC) wasgenerated at the same time.

Drugstore.com was founded on partnerships. Amazon.com, an initialinvestor, still owns 20 percent of the Bellevue, Wash.-based company;CEO Jeff Bezos is on the board of directors. As part of the deal,Drugstore.com gets 10 years of unlimited access to Amazon.com'stechnology and distribution network. Rite Aid and GNC own 14 percentand 5 percent interest in the company, respectively. In return,Drugstore.com acts as their online pharmacy. The equity and exchangepartnerships also give Drugstore.com the exclusive online rights tosell all GNC brand products. GNC and Rite Aid later formed apartnership, and Drugstore.com now has the rights to sell the RiteAid/GNC PharmAssure brand of vitamins and nutritional supplements.Rite Aid and GNC purchased 12.3 million shares in Drugstore.com for$10 million in cash. These exclusive deals also called forDrugstore.com to share access to its customer base forresales.

By teaming up with Drugstore.com and Rite Aid, GNC was able to extendits retail channel beyond the more than 4,500 stores it operatesnationwide, says Archie Isherwood, director of Internet initiatives atGNC. "These partnerships expand GNC's customer reach and lets us offerconsumers a number of options for buying our products," Isherwoodsays.

These deals helped Drugstore.com stack the odds in its favor, says RobLeathern, an analyst at Jupiter Media Metrix in San Francisco. Theyhelped Drugstore.com overcome issues of trust and name recognitionthat contributed to the fall of rivals like Mothernature.com andPlanetRX.com, he adds. "You can't just expect people to come to yourwebsite and know your brand," Leathern says. "The problem with the Webis that it's very difficult to get the customer to the provider. Auser may look for information in a particular context online - say, fora book or a gadget - and the ideal provider will have no idea that theconsumer is there reaching out to them."