Since its launch in the mid '90s, Dell's e-commerce business has been a poster child for the benefits of online sales, says Aberdeen Group analyst Kent Allen. The company's strategy of selling over the Internet -- with no retail outlets and no middleman -- has been as discussed, admired and imitated as any e-commerce model. Dell's online sales channel has proven so successful, says Allen that the computer industry must ask: "Does the consumer need to go to the store to buy a PC anymore?" Regardless of the company's past success, Dell is affected by two current trends in e-commerce, says Forrester analyst Carrie Johnson. And only one of these trends works in the PC giant's favor. The early adopters were always comfortable buying PCs online, she notes, but the general public has taken a while to catch up. "What we know about how consumers buy online is that they start with low-ticket, low-risk goods like books, and they eventually begin to trust the Internet more and graduate to higher end products like PCs and travel." At this point, "Enough consumers have been shopping online for three or more years that they trust the Internet to buy almost anything," Johnson says. "Which is why you see apparel do so well now and even computers do so well, because it's not just the early adopters buying online now. We've caught the second wave of online shopping." But while this trend bodes well for Dell, says Johnson, another does not: due to a slowdown in PC sales, what's fueling most of the online growth [in the PC market] at this point are second hand sales of computers. Auction sites like eBay and uBid are enjoying thriving growth rates in PC sales, she says, in contrast to new PC vendors like Dell. So the challenge for Dell now is figuring out how to grow sales in a tough market. The Front End Launched as a static page in 1994, Dell.com took the plunge into e-commerce shortly thereafter, and by 1997 was the first company to record a million dollars in online sales, according to Dell spokesperson Deborah McNair. After six strong years of online sales -- widely regarded by analysts as stumble free -- Dell has racked up some impressive statistics. In the last quarter of 2002, Dell.com logged a billion page views, a company first. According to Dell spokesperson Bob Kaufman, about half of the company's revenue comes from the site, which means approximately $16 billion flowed through Dell.
Dell believes in getting feedback from customers and suppliers so as to bring information from the outside world of Dell. By doing this, Dell could stay competitive with other alternative brands. Michael Dell once said he would roam around, outside Dell to observe, analyse and hear how the people in the outside world thinks about their brand as well as the others. He would crash the chatrroms and listen to their conversation about their deliberation on their purchasing behavior. Therefore, he believes by doing this it gives Dell a great opportunity to improve the company.
Amazon.com operates in the Online Retail Industry. The sector is one of the fastest growing globally and is outperforming the ordinary retail marketplace. It was created after 1995 and it was only the Internet that made it possible for such an industry not only to be established but to become one of the most flourishing sectors in the business environment. What is interesting is that Amazon.com, together with eBay is the pioneer in the field. Both companies were launched in 1995 and are still extremely successful. The creation of e-mail in 1996 had a huge impact on the development of online retail by introducing a fast and easy way to communicate with customers. For this two-year period Internet usage doubled annually, thus, allowing for the expansion of the industry. Google is launched a year later, in 1998, only to become the most used search engine in the world and an essential partner for the online retailers by helping them tailor their websites to customer’s personal preferences and by advertising. After that, more and more people see the opportunity in the growing industry and enter it. By 2001 there are more than 513 million Internet users globally, which calls for action in terms of creating regulations and laws to protect the users and personal property. In 2003, Apple launches iTunes, and provides a platform for low-cost digital downloads. Another major change is the appearance of social media from 2004, which is one of the biggest influencer on the state of the industry. With the launch of iPhone in 2007, this trend strengthens as people get to enjoy the Internet anywhere they want to. From then on, technological advancements have made it extremely easy and fun to shop online, making it ...
Why has Dell been so successful despite the low average profitability in the PC industry?
In 1994, Internet commerce (e-commerce) was miniscule. One day in the spring of 1994, Bezos who was already crazy about computers observed that Internet usage was increasing geometrically and more and more people were getting excited about its astounding commercial possibilities. A few inventors were already trying to make use of the new technology. Bezos saw an opportunity for a new sphere of commerce, and immediately began considering the possibilities. The thought foremost in his mind: "What is it that users cannot get easily offline that will sell online?"
...e will be self-designed and computer generated, of course. Fulfillment of services will be provided exclusively by CCC's owner. Technology is obviously a critical component of this business: It will be important to stay up to date on both equipment and knowledge to remain competitive in th? future. Bibliography Crayton, Harrison. Michael Dell steps aside as CEO of Dell Inc.: Dallas Morning News, Th? (TX), 03/04/2004; (AN W73230395460) pp 2Caroline, Humer. Dell Inc. reports 24% gain in fourth-quarter net profit By: Toronto Star (Canada), 02/13/2004; (AN 6FP2158689500). Pp 3McWilliams, Gary. Dell Inc. Installs Security Chip In Business PCs. By: Wall Street Journal - Eastern Edition, 2/2/2005, Vol. 245 Issue 23; (AN 15943600) , p D4Caroline, Humer. Dell Inc. reports 24% gain in fourth-quarter net profit By: Toronto Star (Canada), 02/13/2004; (AN 6FP2158689500). Pp 5
Dell Inc. weakness was cell manufacturing because their assembled computers were being shipped five to six days after the order was placed. It is an inconvenience for the customers to always send their computer away to have it repaired. First, they are left without internet access. Second, the time it reaches Austin, Texas, have it repaired, and shipped back can take days. The company opportunities were the Dell U.K. that open business in 1987 and in that country it was a lot of companies selling cheap computers. Dell Inc. strides on loyalty among customers and employees, and that could only be derived from having the highest level of service and performing products. Segmentation within the company enables them to measure the efficiency of the business in terms of assets use. Dell Inc. evaluates their return on invested capital in each segment, compare it with other segments, and target what the performance of each should be.
Speaking about the business model of Dell, it has ability to remain on the higher end of the scale for a particular time period. Dell has business model, which primarily focuses on direct selling line of attack. It in a straight line supplies the PCs to the regulars. It does not believe in intermediary, retailers for the business practices. Undeniably, this gives them an edge to serve customer well. Nevertheless, it understood the importance of retailers and start offering products on the premises of retailers, such as Wal-Mart, Sam’s Club and so on. Next, Dell administration is certain of the exclusive business of PCs. As time goes on, however, observing the
...ds IT products and services create a difficult need/requirement profile that would be challenging for Dell. As more and more consumers in developing regions like China, Brazil, France, and India grow to appreciate computerized environment, they also have complex needs. This way Dell would have a difficult time to incorporate a pervasive marketing strategy. Instead, it should maintain differential but integrative marketing strategy so that the company has a niche in each of the markets in which it manufactures products.
In today's competing world, many organizations are rethinking their strategies in terms of the online business and its capabilities and culture. Organizations are taking advantage of the widespread web to buy and sell goods from other companies and recently from individual customers. Exploiting these opportunities of convenience, availability and widespread reach of the web or Internet, many companies such as Amazon have benefited from the use of web successfully.
Dell Computers Strategy Global companies play an important role in the business environment, because they connect their businesses together around the world. A good example of a global company is Dell Inc., an American computer-hardware company, headquartered in Austin Texas, which develops, manufactures, sells and supports a wide range of personal computers, servers, data storage devices, network switches, personal digital assistants (PDAs), software, computer peripherals, and more. They design, build and customize products and services to satisfy a range of customer requirements: from the server, storage and Premier Services needs of the largest global corporations, to those of consumers at home. According to the Fortune 500 2006 list, Dell ranks as the 25th-largest company in the United States by revenue.
Dell made the bold decision in 1994 to eliminate their products from retail stores and focused on mail order customers. In 1996 Dell began selling through their website as well. By eliminating the retail store presence Dell was able to reduce costs, reduce inventory, and maximize profit. Dell utilized a built to order system that allowed customers to specify exactly what they did and did not want on their Dell computer. Dell's just in time inventory system lowered inventory to 6 days and storage costs were saved.
The E-commerce is an area that Best Buy can expand and explore since it’s a growing market. Growing markets such as the online marketplace, are more attractive than mature and declining markets, and for that reason Best Buy must keep investing on it, seeking a market growth, which has been happening in the past years. Each year, Best Buy is getting more percentage of sales through its online channel, which represents more than 10% of its total sales in a year. The online marketplace represents an opportunity for Best Buy, but at the same time it can be a threat as well. Consumers are becoming more of online shoppers as technology develops and more people have access to it.
Dell Computer’s business model, when viewed with that of a traditional manufacturer was set aside as unbelievable. When Michael Dell thought of making a business like Dell Computer, he focused on making personal computer systems and selling directly to customers. Personal Computer 's Limited could better understand customers ' needs and provide the most effective computing solutions to meet those needs. Notably quoted as saying that “technology is about enabling human potential,” Mr. Dell’s vision of how technology should be designed, manufactured, and sold forever changed the IT industry.
The Information revolution is changing our daily lives. With the rapid development of computers and the internet, online commerce has become quite common and plays an important role in the modern world. Online business has been booming in recent years. US online retail sales rose an average of 11% in the first three months of 2009 (“US Online Sales Up,” 2009). The growth of online sales may be due to the growing number of consumers who shop online.
Dell’s initial competitive strategy, when it was founded in 1984 by Michael Dell, was to focus mainly on differentiation. Its strategy was to sell customised personal computer systems directly to customers, which was a rapidly emerging market at that time (1). This was done by targeting second-time customers, those that already understand computers and know what they wanted. Meanwhile other companies at the time was selling “’plain brown wrapper’ computers” (2). By offering customisations, Dell gained a better understanding of customers’ needs and wants. This helped the organisation position itself differently against the more popular brands, such as Compaq and IBM.