Selling computers to consumers and SMB's via the internet
Although it may seem common-place now, with many companies selling their goods and services via the internet, Dell was one of the pioneers of the direct sales via the internet model back in the mid 1990's. According to the Business2000[2] website case study on Dell, since 1996 when Dell opened its website www.dell.com for e-commerce the company has had huge sales success. By 1997 the company recorded $1 million in online sales. By 2000 the company’s internet sales had reached $50 million a day.
Dell markets it products and services directly to the consumer. The advantages of this for the consumer are that they may take as little or as long as they like to choose a product and configure it to suit their needs and budget. The screenshot below depicts the current homepage for Dell Australia. Dell splits up their product line into home/small office, medium business and large business categories.

Once a category is selected the user can view the product range to select the type of product that they are interested in purchasing. The screenshot below shows the product range for laptop computers in the home/small office group. Note the use of clear, colorful pictures and eye-catching product offers. According to Maguire[3], Dell has been one of the pioneers of direct consumer sales via the internet and their webpages are prime examples of the right way to sell products on the internet.

Once a particular product is selected. The purchaser has the opportunity to customize that product with peripherals and additional accessories to suit their requirements. As the product is customized the website recalculates the total cost.

Upon completion of the product customization or selection of a product model without change, the website allows the user to add the product to an online shopping cart. If the user elects to go ahead with the purchase of one or more products within their online shopping cart, the purchase may take place online, via a secure payment system, through Dell's finance services or the consumer may elect to call Dell to make payment. Once the payment has been made, the purchaser may return to the Dell website to track their order as it passes through the build-test-package-distribute cycle.
The direct-to-consumer via the internet sales approach also has advantages for Dell. Kraemer et al[4], note in their research paper on Dell that the value chain created around their products is simple: Suppliers->Dell->Customer. This simplified value chain allows Dell to have direct interaction with their customer and it saves them money by only building computers once a customer orders it (reduced warehouse related costs).
Conclusion
This blog entry is intended to be an informative piece that illustrates the unique method of directly selling computers and related products to consumers via the internet. In the mid 1990's Dell was a pioneer of this technique and remains so to this day. Their computer value chain is simpler than other PC manufacturers and does not introduce channel conflict with this model.
In researching this entry, I learnt that Dell had, prior to 1996, actually sold their computers via the traditional PC manufacturer model. But, they realized the value of the direct sales model through the then rapidly expanding internet and began moving their sales, service and manufacturing systems across to an e-commerce model whereby they effectively have become a virtual company.
References
References
[1] Dell Australia public website, http://www1.ap.dell.com/content/default.aspx?c=au&l=en&s=gen
[2] Business2000 website, Dell Case Study, http://www.business2000.ie/cases/cases_7th/case8.htm
[3] James Maguire, Case Study: Dell.Com, http://www.ecommerce-guide.com/news/trends/article.php/10417_2013731
[4] Kenneth Kraemer and Jason Dedrick, Dell Computer: Using E-commerce to support the virtual company, http://www.crito.uci.edu/git/publications/pdf/dell_ecom_case_6-13-01.pdf
[4] Kenneth Kraemer and Jason Dedrick, Dell Computer: Using E-commerce to support the virtual company, http://www.crito.uci.edu/git/publications/pdf/dell_ecom_case_6-13-01.pdf
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