Dell Business Model (B): A Case for Business Model Innovation
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Code :BSM0056A
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Region : US
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Dell's Business Model: The Retailing Strategy In the early 1990s, Dell used direct as well as indirect sales channel to sell its products. Indirectly, it sold its products through mass merchants like Best Buy, Costco, and Sam's Club. Dell sold its computers through retail chains like Soft Warehouse (now CompUSA) and Staples. In 1992, Dell distributed its computers in Latin America through Xerox. However, in 1994, Dell stopped selling its products through them and decided to concentrate on its direct selling efforts... Dell's New Business Model: The Judgement Call Due to lower profit margins, Dell abandoned selling its computers through retail stores. Dell emphasized on direct selling to business segments such as the US Business segment, as it contributed $29,311 million out of Dell's total sales of $57,420 million for the year ended February 2007. But as industry observers felt, there were a few points against Dell -- Developing markets like China and India would dominate 80% of sales in the total PC market. Dell was lagging behind its rivals in terms of market share in these markets. Due to technological and cultural reasons, people in these markets preferred to buy PCs from stores and system integrators. On the contrary, Dell did not have any retail presence in these regions... |
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