Analysis of Dell Online
Analysis of Dell Online Introduction: 1) In July 1996, Dell Computer had launched its online website, www. dell. com 2) Dell also developed Premier Pages, online interfaces with its key corporate accounts.
Story of Dell: * In 1985, Dell shifted it’s company’s focus to assembling its own brand of PCS & business grew dramatically with $70 million(Rs. 364 crores) in sales at the end of the 1985. * Dell’s success continued through 1992, until in 1993, it faced an operating loss for 1st time. * Dell’s product line evolved with PC market. Dell came with Inspiron line & introduced its PCLAN product the power edge in 1996 & workstations in 1997. * To lower the costs of ownership, Dell also worked with its customers on proper software management practices.
* Throughout its remarkable history, Dell’s sales were to large corporate accounts, educational institutions, medium and small business. The Dell Direct Model: * Dell Direct Model was a very efficient “made-to-made order” high velocity, low cost distribution system ; products ; services targeted at specific market segments. Dell serviced North American market from its 2 plants in Austin, Texas. * Dell process became a model of efficiency for the industry. * Dell also introduced concept of build-to-order in PC industry.
Dell Customer: * Dell broadly segmented its customer as either “Transactional” or “Relationship”. * 40% being relationship ; 30% being transactional. * Transactional customers were individuals or business, who bought from a variety of vendors over time. * Dell’s main competitors in this segment ere companies such as Gateway 2000 & Micron Electronics. * Relationship customers were a key component in Dell’s success story.
Dell Sales force: * Dell organised its business into 4 regions, the Americas, Europe, Japan ; Asia, with a president within each region. * In America, Dell sold its products using a sales organisation. * In 1994, Dell had about 300 field-based sales reps ; a similar no of inside telephone reps. * Role of sales rep changed significantly depending on type of customer being served. PC Distribution Channels: In late 1990’s, PC distribution channels remained fragmented, with major manufacturers using a variety of channels to bring products to market.
* Dell was sole major manufacturer to focus on Direct Channel. * 3 Non-direct channels were: 1. Retail 2. Indirect through VAR’s..
? (DAS Auto, Vijay sales) 3. Indirect through national resellers. (croma,house of laptop) Dell Goes Online: * Mid 1990s saw a dramatic leap forward in use ; functionality of Internet. * Michael Dell had become drawn to the “buzz”(excitement) about the Internet…
.? Dell has been positioned for something like this since its beginning. Transactional Business Online: * 6 Months – $1 million(Rs. 5 crores)/day in Revenues. (customers visited per week 1,50,000) (per customer revenue=Rs. 2400) * 3 more months – $2 million(Rs.
10 Crores)/day in Revenues. (2. 5lacks)(per customer revenue=Rs. 2800) * 6 more months – $3 million(Rs. 15crores)/day in Revenues.
Strategic Decisions: * Dell faces greater challenges. * Its price edge is gradually eroding. (price advantage) It has yet to prove that users in many countries are willing to buy direct, * Its competitors fully understood the trick that’s driven Dell’s success. Conclusion: Dell is simply a success story; it shows how one can gain market advantage by simply understanding what brings value to customers. No one, even Michael Dell himself when he started, thought that people would enjoy customizing their PC orders and wait patiently as the order makes its way back to their homes.
Some studies talk about how people challenged the initial delivery estimates provided by Dell to see if they were met.The level of expansion Dell strived to achieve brought in problems as with any growing business. However, by adapting techniques such as In-sourcing and mutual benefit partnerships it reduced its potential staff from 80,000 to only 15,000. Dell also was aware of factors that would hinder its supply chain. For example, they maintained a multiple list of shippers as not to be affected by unexpected delays and organizational issues. In addition, they understood the importance of developing their own enterprise systems in-house to control all the variables and maintain their business processes.