In its second-largest acquisition, Amazon buys the company for $970 million.
Annette Zientek, president and founder of Christine Columbus Inc., a Lake Oswego, Ore.-based Internet retailer of travel products for women, was considering whether to hire a business strategy consultant. While the consultant had come highly recommended, Zientek was less than impressed with the project proposal the consultant submitted. “It was sort of vague and quite a lot of money for three months of work,” she says.
Zientek then checked with two people who had worked with the consultant, but weren’t on her list of references. Neither expressed much enthusiasm. In one case, the consultant had generated tension between co-workers. In the other, she had produced little that was of real value. With several unflattering testimonials supporting her gut feeling, Zientek decided not to hire her.
Zientek’s procedures are a textbook case in evaluating a consultant. There’s no doubt that consultants can bring the expertise an e-retailer needs to quickly get up to speed in a certain function, or offer an objective look at strategic direction. However, as Zientek’s experience shows, not all consulting engagements are likely to achieve the results the e-retailer needs. As a result, they waste time and money.
The first key to effectively working with a consultant starts before anyone walks in the door. Management needs to figure out exactly what it hopes to gain. Otherwise, it becomes next to impossible to determine when the project is done, and whether it’s successful, says David Taylor, partner with eMarket Holdings, a Stamford, Conn., strategy consulting firm.
This doesn’t mean that web retailers need to know exactly what type of warehouse management system or e-mail marketing campaign, for instance, that they need. In fact, the consultant may be hired to help them make those decisions. However, retailers should know what sort of insight and recommendations they expect from a consultant.
Study the portfolio
Avoiding one-size-fits-all generalists also is critical. “There’s so much out there, no one person or group can have expertise in all areas,” says Christine Merser, former chair of luxury retailer bestselections.com, and now an Internet consultant in New York. One way to find such experts, says Merser, is to visit web sites that excel in a particular function, and then call and ask the sites operators who they used. For instance, an e-retailer that is trying to boost its standing in the search engine rankings could see which firms appear at the top of the lists, and contact a few of them.
At the same time, studying the consultant’s portfolio is key. “Without getting into the technical details, can you recognize your situation in the work they’ve done in the past?” asks John R. Rymer, president of Upstream Consulting in Emeryville, Calif.
A lack of bureaucracy also helps, says Rob Fleming, director of information technology with eAngler.com Inc., a Tampa, Fla.-based Internet retailer for fishing aficionados. eAngler used Cotelligent, a consulting firm in San Francisco, to develop its credit card authorization and shopping cart applications. Because the two firms didn’t have to go through layers of management to authorize changes, they were able to roll out the improved web site in just under two months, Fleming says. “Working on projects where there’s a couple layers of management was OK five or six years ago, but last year, you couldn’t do it.”
Internet retailers should look for consultants that have experience working with firms of a similar size. For instance, a high-volume e-retailer hiring a consultant to develop an order-fulfillment system needs one that can handle a sizable project, says Michael Dempsey, a Chicago-based principal with consulting firm Esync International, Toledo, Ohio. On the other hand, a boot-strap operation with a handful of people will gain little from a consultant offering up grandiose ideas that the firm is unable to implement, Zientek says.
Grilling the consultants
Before signing on the dotted line, Taylor of eMarket Holdings recommends that e-retailers ask potential consulting firms what they know about the e-retailer’s business and any ideas they have for improving it. This is the exact opposite of the way in which many Internet retailers start-by spilling their guts. “A good consultant can spin that around and give it back to you,” warns Taylor.
In addition, Internet retailers need to talk with the technical people who will be working on the project. eAngler’s Fleming always requests their resumes, meets with them, and throws out a few technical questions. “If they start squirming, you know it’s not a person you need on your team,” he says.
Once a consultant is hired, it’s tempting for the retailer to want to hand the consultant the project. However, constant, clear communication is critical. “You can’t dump everything and walk away,” cautions Sandy Grossman, vice president of marketing with Impromptu Gourmet, a New York-based online purveyor of gourmet dinner kits. The company also sells to about 20 grocery stores in the New York area.
Because just two of the company’s 30 employees are in the marketing department, Grossman has outsourced much of Impromptu Gourmet’s public relations and marketing functions. Key to making it all work has been her emphasis on ongoing communication. “We clearly define roles and responsibilities and the chain of command,” Grossman says. “And, we give lots of feedback.” Impromptu Gourmet meets monthly with its public relations firm to set goals, and then reviews progress against the goals on a bi-weekly basis.
The constant communication pays off. When Impromptu Gourmet recently held a launch party with 500 people, the public relations firm was able to run the show. “We gave them full responsibility,” says Grossman. The retailer’s staffer who takes charge of communication should have the authority, expertise and communication skills to keep the project moving. CyberSource Global Professional Services asks its clients to identify a project sponsor from within the executive level, as well as a project manager who can provide answers to the day-to-day issues that come up, says Terence Hancock, a senior project manager with the firm. CyberSource, based in Austin, Texas, develops transaction processing applications