Dell Inc. has spent over 3 decades reshaping the personal computing industry especially the Laptop. The company has made sweeping strides, bringing in phenomenal new concepts, most importantly among them, was the Supply chain and the way to market of products. Dell has seen meteoric rise as well as tumultuous falls in its history. It has often come back stronger with varied marketing strategies and products. As Dell’s sales have plummeted in recent times, a new strategy is in order. Dell today stands 4th in the worlds PC market, whence it stood at the top just 5 years ago. With lowered expectations and a company in crisis, Dell now needs a miracle to help with its return to the top of the PC market. This post takes a look at the changing strategies of Dell computers in terms of market share and the challenges it faced and continues to face in recent times.
The Changing Strategies of Dell Computers
The Online Supply Chain (1988-2005)
Dell’s path to market was predominantly online for better part of its existence. What started out as a cost saving measure, eventually helped propel the company to Global dominance. Early 90s was still an age when consumers preferred the local Mom and Pop computer outlets selling branded computer products from companies such as Apple, IBM and Compac. Users didn’t have the freedom to assemble products with their own configurations or based on their own need. Companies were found branding their products broadly based on 3 users, Home, Scholastic and Business.
Dell revolutionized the market with complete customizability for their products. Users finally had the choice of choosing the exact specifications of their product from the monitor size to the Ram and motherboard and even operating system. While keeping costs low, Dell’s Online supply chain, ensured faster sourcing and delivery of products. A practice it continues to employ even today and which competitors have gladly copied. Dell grew meteorically in this time period rising to the top of the market
The Offline Market (2005- present) – Rise of Dell in India and developing markets
Dell’s initial growth was largely limited to the United States of America and developed nations such as Europe, but the growth of the company was clearly limited in these markets. Dell had to tap into the market potential of developing countries and economies such as India and China and even meet up with service constraints that existed in these markets, most importantly, the lack of Supply chain and the low level of Internet Penetration. Dell decided to reach to these markets through the traditional offline way to market, through the network of Distributors, Dealers and Sub Dealers.
The company however faced massive resistance from these markets, who found the margins offered on the products low. The existence of parallel supply chains didn’t help the products either. Dell’s range of laptops and desktops initially suffered from service and delivery issues and faced stiff competition from established competitors such as HP, Compac, Sony etc.
While competitors invaded the online space, Dell was suddenly faced with tough decisions regarding supply chain economics and policy. Dell was quick to revise product margins and even build healthy relationships with supply chain partners. Dell adopted a model popularly used by Insurance agencies, but creating a battery of sales professionals and had over 35 Master sales affiliates. This helped reduce channel conflicts and ensured that Dell could maintain its high rate of customizability for products.
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Slowly but surely Dell grew into a force even in developing markets beating out market leaders. Early 2007 saw Dell tying up with offline retailers such as Walmart and Sam’s Club in the US and Latin America while in markets such as India, Dell tied up with Tata’s Chroma Retail and Staples. Dell’s market share has taken a beating in recent times with lower margins in the consumer PC segment.
Rise of ecommerce Stores (2010- present)
Dell Laptops and Desktops have always been a glowing example of the effective use of Online web portal for selling consumer electronics. The rise of Ebay and Amazon, helped Dell reach out to an even wider audience of online shoppers. The rise of ecommerce in India has now opened yet another channel for Dell to sell products and it is taking full advantage of the same. A look at this Dell laptop price list reveals just how competitively Dell has priced its products in the online markets. Online retailers are selling the right mix of Dell products with what a majority of consumers need.
While it is still early days for Indian ecommerce, we are seeing more people preferring to buy laptops online. It will be interesting to see how Dell capitalizes on this new way to market. Ecommerce stores provide Dell the added advantage of economies of scale and reduce the customization options for customers as well. At the moment Dell computers is one of the most popular brands sold online behind only HP in India. With a broader spectrum of products, Dell may gain in times to come from the rise of ecommerce stores
Summary
Dell has seen both heydays and troubling days in over the few years. In all these changes, Dell has innovated new ways to market to reach a broader market. Dell’s innovation with Direct to Customer marketing model, its change to offline retailers for developing markets and more recently its switch to online ecommerce sites is commendable. One thing is certain, Dell will soon make its comeback in the mainstream market.
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