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Scared into e-commerce Web sites

Internet consulting companies are using an age-old sales tactic to capture new business: fear.

Kim Girard
Kim Girard has written about business and technology for more than a decade, as an editor at CNET News.com, senior writer at Business 2.0 magazine and online writer at Red Herring. As a freelancer, she's written for publications including Fast Company, CIO and Berkeley's Haas School of Business. She also assisted Business Week's Peter Burrows with his 2003 book Backfire, which covered the travails of controversial Hewlett-Packard CEO Carly Fiorina. An avid cook, she's blogged about the joy of cheap wine and thinks about food most days in ways some find obsessive.
Kim Girard
4 min read
Internet consulting companies are using an age-old sales tactic to capture new business: fear.

At consultancy Scient, for example, executives sketch a chilling scenario in sales pitches to prospective clients: Right now, some of your key executives are planning to quit and set up a new online competitor to put you out of business. Making matters worse, the competition is already well on their way with similar plans.

Chalk up a new client for the consulting firm.

Fright is one effective tactic services and consulting firms are using to score new deals with companies that may have balked at tackling a full-bore e-commerce agenda.

"We are trying to instill a sense of urgency around the fear of getting left behind by some dot com company and becoming a footnote in business history," said Christopher Lochhead, chief marketing officer at Scient, which offers strategic advice to companies taking steps onto the Web.

Indeed, Jeff Kaufman, president and chief operating officer at Cirqit.com, went to Scient two months ago expressing a vision to "Amazon" the printing industry online. Scient convinced the firm, the online venture of commercial printing giant L.P. Thebault Company, that its vision wasn't broad enough. Cirqit.com now plans to launch a Web site by the end of this month.

"We were going to take it in baby steps," Kaufman said. "They played the fire drill with us. They said if you don't do it this way you can be out-positioned by [your competitors]."

"I think they're marching out and saying: You better do this or you're going to get hit by a Mack truck--or this company will Amazon you," Kaufman said, though he noted that he believes his company is moving online ahead of the curve.

Ever since the phrase "getting Amazoned" made its way into Wall Street's vocabulary, most offline retailers haven't needed too much prodding to set up shop online. The Internet retail giant Amazon.com, in its first incarnation as a bookseller, blew past market leaders Barnes & Noble and Borders. The bricks-and-mortar bookstore giants have since played Internet catch-up.

The retail landscape is littered with offline laggards, including Toys "R" Us, which is making a furious bid to get on track against Internet pioneer eToys. Many other offline companies are joining Toys "R" Us after being whipped into a frenzy by the marketing rhetoric of many e-commerce consulting and services firms.

Riding the huge success of IBM's advertising-driven e-business initiative services strategy, the sector is crowded by companies dedicated to e-services only, including USWeb, Viant, Proxicom, and iXL.

Although they have yet to make a profit from their online units, most companies, including the Fortune 500, understand that a strong Internet strategy can cut bricks-and-mortar costs and expand a customer base. USWeb/CKS cofounder and president Toby Corey predicts half the Fortune 500 will be replaced by nimble, new Web firms.

"The choices are either reinvent yourself or get knocked out of the game," Corey said. "It's that simple."

Some executives have taken that message to heart and welcome consultants' scare tactics. Bob Schwartz, general manager of Seattle-based Nordstrom.com said he expects his project partner, the Web site design firm Adjacency, now owned by Sapient, to scare him when necessary.

"I told Adjacency to stand on a table and yell at me and scream at me," he said. "I don't want them to be 'yes' men if they think I'm going in the wrong direction. I want a partner who's going to speak up and voice an opinion."

Tony Tjan, a founder of Internet consulting start-up Zefer, said it's necessary to illustrate how the Web might threaten a client's business.

"I don't think you always have to sell by fear," said Tjan, whose Boston-based company has 250 employees and is hiring, on average, one per day. But that depends on how vulnerable the offline company is to cannibalization by online businesses, he said, adding that music, software, and print media industries are now being "being flipped on their head."

With these sorts of businesses, he said, "you have to really think hard about what online attackers can do."

However, Scott Silverman, director of Internet marketing at the National Retail Federation in Washington, said there's no need for services companies "to put the fear of God into these retailers."

"I think Wall Street will do that just fine," said Silverman, who said offline retailers still have the upper hand when it comes to market share and business experience and have the time to work out Internet strategies in their own time.

For now, Corey said companies moving forward are typically doing so out of fear, rather than for financial gain.

"It is either fear or greed, and today it's clearly fear," he said.