Using E-Commerce for Success: Dell Case Study
Chapter One: Overview of Electronic Commerce
ONLINE FILE W1.1
Application Case
DELL—USING E-COMMERCE FOR SUCCESS
The Problem/Opportunity
Founded in 1985 by Michael Dell, Dell Computer Corp.
(now known as Dell) was the first company to offer personal computers (PCs) via mail order. Dell designed its own PC system (with an Intel 8088 processor running at 8 MHz) and allowed customers to configure their own customized systems using the build-to-order concept. This concept was, and is still, Dell’s cornerstone business model. By 1993,
Dell had become one of the top five computer makers worldwide, threatening Compaq, which started a price war.
At that time, Dell was taking orders by fax and snail mail and losing money. Losses reached over $100 million by 1994.
The company was in trouble.
The Solution
Direct Marketing Online. The commercialization of the
Internet in the early 1990s and the introduction of the World
Wide Web in 1993 provided Dell with an opportunity to expand rapidly. Dell implemented aggressive online order taking and opened subsidiaries in Europe and Asia. Dell also started to offer additional products on its website.
This enabled Dell to batter Compaq, and in 2000 Dell became number one in worldwide PC shipments. At that time,
Internet sales topped $50 million per day (about $18 billion per year). Today, Dell (dell.com) sells about $62 billion a year in computer-related products online, from network switches to printers, employing over 88,000 people.
Direct online marketing is Dell’s major electronic commerce (EC) activity. Dell sells to the following groups:
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◗
◗
◗
Individuals for their homes and home offices
Small businesses (up to 200 employees)
Medium and large businesses (over 200 employees)
Government, education, and health care organizations
Sales to the first group are classified as business-toconsumer (B2C). Sales to the other three groups are classified as business-to-business (B2B). Consumers
ONLINE FILE W1.1
Application Case
DELL—USING E-COMMERCE FOR SUCCESS
The Problem/Opportunity
Founded in 1985 by Michael Dell, Dell Computer Corp.
(now known as Dell) was the first company to offer personal computers (PCs) via mail order. Dell designed its own PC system (with an Intel 8088 processor running at 8 MHz) and allowed customers to configure their own customized systems using the build-to-order concept. This concept was, and is still, Dell’s cornerstone business model. By 1993,
Dell had become one of the top five computer makers worldwide, threatening Compaq, which started a price war.
At that time, Dell was taking orders by fax and snail mail and losing money. Losses reached over $100 million by 1994.
The company was in trouble.
The Solution
Direct Marketing Online. The commercialization of the
Internet in the early 1990s and the introduction of the World
Wide Web in 1993 provided Dell with an opportunity to expand rapidly. Dell implemented aggressive online order taking and opened subsidiaries in Europe and Asia. Dell also started to offer additional products on its website.
This enabled Dell to batter Compaq, and in 2000 Dell became number one in worldwide PC shipments. At that time,
Internet sales topped $50 million per day (about $18 billion per year). Today, Dell (dell.com) sells about $62 billion a year in computer-related products online, from network switches to printers, employing over 88,000 people.
Direct online marketing is Dell’s major electronic commerce (EC) activity. Dell sells to the following groups:
◗
◗
◗
◗
Individuals for their homes and home offices
Small businesses (up to 200 employees)
Medium and large businesses (over 200 employees)
Government, education, and health care organizations
Sales to the first group are classified as business-toconsumer (B2C). Sales to the other three groups are classified as business-to-business (B2B). Consumers
References: Performance.” E-Commerce Times, August 16, 2008. InformationWeek. “Some Beijing Olympics Fireworks Faked.” August 11, 2008a news/personal_tech/TV_theater/showArticle.jhtml? articleID=210002310 (accessed March 2011). InformationWeek. “YouTube to Broadcast Beijing Olympics, but Not in the U.S.” August 5, 2008b .com/news/personal_tech/TV_theater/showArticle .jhtml?articleID=209903442 (accessed March 2011). IT Strategy. “IT’s Role in the Beijing Olympics.” August 28, 2008 Taft, D. K. “NBC Olympic Coverage Shines as Silverlight Proving Ground.” e-Week, August 13, 2008. manufacturing processes from mass production to mass customization (Anderson 2002). In mass production, a company produces a large quantity of identical items