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Dell Computers is a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures. Company revenue for the past year totaled $57 billion. Dell, through its direct business model, designs, manufactures and customizes products and services to customer requirements, and offers an extensive selection of software and peripherals.
Since its launch in the mid '90s, Dell's e-commerce business has been a poster child for the benefits of online sales, says Aberdeen Group analyst Kent Allen. The company's strategy of selling over the Internet -- with no retail outlets and no middleman -- has been as discussed, admired and imitated as any e-commerce model. Dell's online sales channel has proven so successful, says Allen that the computer industry must ask: "Does the consumer need to go to the store to buy a PC anymore?"
Regardless of the company's past success, Dell is affected by two current trends in e-commerce, says Forrester analyst Carrie Johnson. And only one of these trends works in the PC giant's favor.
The early adopters were always comfortable buying PCs online, she notes, but the general public has taken a while to catch up. "What we know about how consumers buy online is that they start with low-ticket, low-risk goods like books, and they eventually begin to trust the Internet more and graduate to higher end products like PCs and travel."
At this point, "Enough consumers have been shopping online for three or more years that they trust the Internet to buy almost anything," Johnson says. "Which is why you see apparel do so well now and even computers do so well, because it's not just the early adopters buying online now. We've caught the second wave of online shopping."
But while this trend bodes well for Dell, says Johnson, another does not: due to a slowdown in PC sales, what's fueling most of the online growth [in the PC market] at this point...