Dell sold its product to End user customer /corporate customers.
Using direct sales model via Internet and Telephone network.
Started in 1996
Dell online is a high success story – industry analyst
Millions of people visit the website each week and generate millions of dollars revenue.
Dell’s business model is to let the customer configure the product on the web and fulfill within 36 hours.
Customers can check the order status and also get the technical help online.
DELL’s VALUE WEB MODEL
DELL’s VALUE WEB MODEL Component Suppliers
The suppliers of high-tech components, such as microprocessors and software provided by firms such as Intel and Microsoft,
The low-tech, low-differentiation components manufacturers who compete on prices and availability.
DELL’s VALUE WEB MODEL CMs/OEMS
Original equipment Manufacturer(OEM)
The OEMs traditionally would receive all the parts from their suppliers, assemble the computers in their production lines and ship them over to their distributors, or Corporate resellers.
e.g. Company ‘XYZ’ receive parts from Intel (processor), Microsoft (software) then this company assemble the computer to Santech computer.
DELL’s VALUE WEB MODEL Distributors
They generally supply to corporate resellers and other distributors.
They carry large quantities of different products, to increase their leverage when dealing with their customers.
They also provide specific software, peripherals, furniture, etc, as well as service.
e.g. Ingram Micro, Tech Data, Computer 2000, and Santech .
DELL’s VALUE WEB MODEL System integrators
Corporate resellers/System Integrators
The corporate resellers or systems integrators generally buy systems directly from manufacturers and install these systems at their corporate clients.
These are firms whose main purpose is to provide customization to their clients.
integrate software, hardware, and network capabilities
Manufacturer Manufacturer consumer commercial
Particular Name of companies Component parts Intel(microprocessors), Sony(picture tube), Third party hardware and software supplier Microsoft Distributors Ingram Micro, Tech Data, Computer 2000, and Santech . Retailers Wal-Mart, Office Max, Computer City, CompUSA and Micro-Center System integration Wang, Unisys, and IBM Repair and Support companies Wang, Unisys, IBM and BancTec
Dells model looks surprisingly simple.
Behind this simple model is the complex hard to imitate core capabilities developed over 15 years.
Benefits to company by such distribution
CASH: Dell maintains a negative cash conversion cycle means the payment receive for product before it has to pay for material.
Dell’s direct sales and build-to-order model has achieved superior performance in the PC industry in terms of inventory turnover, reduced overhead, cash conversion, and return on investment
Bypassing the reseller channel that causes further cost reduction to company.
CRM: Direct customer relationship is the key to Dell’s business model, and provides distinct advantages over the indirect sales model.
DEMAND FORECAST : Dell additional advantages over indirect PC vendors who must try to forecast demand and ship products based on those forecasts.
Benefits to customer by such distribution
Tailored offerings from Dell in terms of add-on products and services.
Very customizable systems at an affordable rate, since Dell manufacturing builds specifically for each customer.