E-Commerce: Dell Direct Store Case Study

E-commerce has proven to be a viable business option for many companies as it brings the service and products to the customer. It has also enabled many formidable companies to build on their retail sales. In the age of clicks, the customer values convenience and quality more than anything.

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Dell has stood out since the mid-90s for its ingenious e-commerce business strategy that saw it create a niche market and eliminate the burden of a middleman. This channel proved so successful that it was emulated by other companies in the industry. Consumers are able to review and buy personal computers online as well as have customized interfaces. To cap all this, the manufacturing and delivery process is done within the locale of the customer, therefore, eliminating quality and time constraints. This strategy has enabled the company to not only make burgeoning sales but to directly interact with the customers and tweak their products and services to the needs of the customer.

SWOT Analysis

Strengths

Customized interface for corporate customers who need specialized services and products. This eliminates the need for bureaucracy and eliminates time wastage for the companies. Additionally, corporate customers end up being personal consumers.

Innovative thinking, ways of smoothening user and customer experience through their constant need to understand the customers needs and wants, they are aware of deals and services offered

Quicker manufacturing and shipment of products to customers. Once a customer places an order, the work begins immediately from the workshop that is nearest to the customer, therefore, enabling them to cut down on shipment costs.

Weaknesses

The technology employed by the brand is no different from its competitors. It does not have propriety and ground-breaking innovation like Apple Corporation

Opportunities

Due to its ability to penetrate the e-market community earlier on than its competitors, it has been able to sell its products directly to the consumers.

Constant collaborations/partnerships that enable it to branch out to niche markets

Threats

Companies, like E-bay, which offer customers second-hand computers for a lower price.

Competition from rivals such as Apple Computer, Hewlett-Packard and Silicon Graphics that also includes price wars.

Dells e-commerce strategy can definitely be applied to other products such as mobile phones and automobiles. Major mobile corporation Apple, has successfully managed to tap into this niche with its out of the box marketing strategies. It managed to develop the iPhone line with credible strategies that had millions pre-ordering for the phones before they were even officially launched. The most aching need being that of convenience, consumers crave to have access to products and services at a click or with the press of a button. Apple has utilized the internet revolution through the establishment of accounts such as the Apple store that have seen it acquire up to 435 million accounts worldwide due to its open-mindedness on how to sell digital goods (Thomas, 2012). It is, therefore, safe to conclude that Dells e-commerce approach has been the template for many companies to replicate a similar and successful strategy.

Dell set up its Kiosks, otherwise known as Dell Direct Store in 2002 in shopping malls and airports. This was aimed at increasing direct sales as well as enhancing the customers interaction with its e-commerce platform. Customers got an opportunity to sample the products and services at the Kiosks and, later on, place an order on their website. This was a hybrid innovation that marked its entry into the retail industry as evidenced by its collaboration with major malls such as Walmart. Furthermore, much as many other companies adopted a similar strategy, Dell had to work on its back end strategy to ensure that service delivery was efficient, and there were no holdups in manufacturing and shipping of its products. However, after a period of over ten years, Dell decided to roll out the Kiosks due to hard competition from manufacturing company Hewlett and Packard (Gaudin, 2008). HP has created a niche market and, therefore, ended up being the worlds largest computer manufacturing company. Therefore, Dell had to go back to the drawing board to come up with strategies that would ensure the retail sales were just as good as the direct sales.

Toyota also came up with a similar strategy to that of Dell Company in the same year. This was initiated with the launch of the Scion vehicle line that was aimed at reaching the youth demographic. The kiosks provided users with an interactive website to access information on the companys website about the new car. They also gave similar provisions to that of Dell in which customers were able to view the car models in 3D and explore video clips as well as advertisements (Kiosk Marketplace, 2002). Toyotas conviction to enhance customer sales through this initiative proved successful as consumers had a real time interaction with their products. This is because, at the kiosks, the company was able to promote its brand through increasing awareness to its website. Secondly, it was able to advertise specials which were a perfect way to drive sales for its new model. Most importantly, the company is able to survey its customers about its products and services. Consequently, Toyota managed to increase traffic to its website which in turn converted subscribers to customers. Overall, Toyota had better success with the kiosks than Dell managed to because it combined hybrid strategies and stayed ahead of the competition.

References

Gaudin, S. (2008, January 30). Dell Closes Kiosks to Chase HP in Retail Sales. Retrieved from Computer World: http://www.computerworld.com/article/2538874/windows-pcs/dell-closes-kiosks-to-chase-hp-in-retail-sales.html

Kiosk Marketplace. (2002, April 1). Toyota Turns to Kiosks for New Product Line. Retrieved from Kiosk Marketplace: http://www.kioskmarketplace.com/news/toyota-turns-to-kiosks-for-new-product-line/

Thomas, O. (2012, September 12). Apple Is Destroying Amazon and Google In E-Commerce with 435 Million Accounts. Retrieved from Business Insider: http://www.businessinsider.com/apple-online-payments-amazon-google-2012-9