Dell defends decision to shift to retail

Dell Incorporated's CEO and founder, Michael Dell, defended his company's new strategy to begin selling desktop PCs in Wal-Mart stores in the United States, Canada and Puerto Rico starting in June, saying the departure from the direct sales model the company pioneered is part of a new effort to expand its market. "The direct model was a real revolution in the computer industry, but it's not a religion. We're expanding the number of places and ways people can buy our products," said Dell.

It's not the first time the company has tried the approach. More than a decade ago, the computer maker briefly sold its product through retailers such as Wal-Mart's Sam's Club stores in the U.S. before abandoning the strategy and concentrating on the direct sales model it pioneered. Now Dell thinks the time is right to give the strategy a second chance.

"One thing that's different is that Dell is about 20 times larger, so that kind of changes things a bit. I also think that price points have changed fairly dramatically so in the early 90s a computer was a couple thousand dollars and now computers are quite a bit less expensive," the CEO said. The company's founder also acknowledged that design is becoming an increasing important differentiator as the price of computers goes down. He promised that his company would be introducing new products in the coming months that address that issue.

News source: CBC News

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I think this will be a great move for dell as it will appeal to the impulse buyer. Do you think that the xps series will be out on the floor? I don't think it will, but would be nice to see what these pc's can do for the added cost of them.

I think it would be benificial to dell and to wal-mart to have dell trained sales reps there to answer questions that customers would have. I also think that offering dell referbished at sams club would also be benificial due to the fact that they sell for less and come with what ever warranty you want to purchase (or the standard 1 yr which is free but is crap).

Some people want a store to go to to buy a pc (non tech savvy, ppl who still use dial up (yes there are more that use dial up than do not, look in the central us where cable and dsl arent popular, outside of major or highly populated cities), and ppl who are completly afraid of internet commerce because of identity theft (my inlaws for example) not understanding or knowing of the different types of securities that protect this information.

I think selling on a retail floor is a great idea...that is if the sales associates are properly trained to handle the myriad of technical and non-technical questions that would-be Dell buyers will ask.

One good thing about point of sale type retailling is that at certain stores, they incorporate various marketing strategies such as if using their consumer credit card (store credit card) they can take advantage of no interest and no payments for a certain time period, or an additional 10% discount when using their cards.

It also gives the consumer a brick and mortar store to return merchandise under the "in-store" return policies or to exchange a damaged or defective computer.

In other words, this marketing strategy allows Dell to use the store's own retail policies to market their products whether it be promotional sales or return policies.

As for excellent customer service...well there's the trade off. If you buy into Dell's extended warranty program which can give you upwards of three years of tech support and even a damage replacement policy, their customer service is outstanding. But if you don't...oh man your tech support can be mind numbingly horrific.

So does that make Wal-Mart's customer service better? Depends on who's standing behind the service desk and how rough their day has been...but in WM's case, at least you can scream at a manager in his/her face and get some immediate action done for a computer that failed to work. At Dell's phone support, all you get is a "click" if you become beligerent.

For me I think Dell's idea of going retail in that way is a great idea but they had better start sending representatives to each store to train the sales associates on how to sell computers or else it ain't gonna be very pretty when problems occur after the purchase.

Easiest way....

Buy a computer building manual and build a system yourself, it's not hard, if you can master LEGO then you will be fine!

For some people it is hard. Don't assume that because you can do it, everyone else can do it. Trust me, my younger brother could not put a computer together, he'd surely break something.

Hurmoth said,
For some people it is hard. Don't assume that because you can do it, everyone else can do it. Trust me, my younger brother could not put a computer together, he'd surely break something.

Chance are that one person in the family can so that person can help the others out.

I think Gateway proved that is a bad idea. Look at it from this standpoint: you got to Wal-Mart for everything else, why not computers and shoot HP has proven that retail outlets such as Wal-Mart, Best Buy and Circuit City are excellent places to sell without having your own retail stores.

I personally think Apple's market share would soar if they went back with Best Buy and added outlets such as Wal-Mart, and Circuit City.

(can you tell I'm a huge proponent of retail outlets like this :P )

It's not like this is a new idea for Dell. Like the article said, Dell sold PC's at Sam's and CompUSA in the mid 90's. This didn't work out too well for them. They also sold through Rent-A-Center for several years. This was a complete disaster. I give this venture at most 1.5yrs before they go back to a completely direct model.

Dell already has pseudo retail stores with their mall kiosks. I've heard rumblings about a full retail store similar to Apple stores. I just don't see this working. The mall kiosks are so bastardized. I could just imagine what a retail store would look like. Also, I don't think the corporate culture at Dell would allow internal allow support for a retail outlet.

Hurmoth said,
I personally think Apple's market share would soar if they went back with Best Buy and added outlets such as Wal-Mart, and Circuit City.

Apple used to sell their computers at Sears and Wal-Mart. It was during that time that their market share plummeted. Since they opened their Apple Stores, sales have soared. I guess Apple's business people know something you don't.

roadwarrior said,

Apple used to sell their computers at Sears and Wal-Mart. It was during that time that their market share plummeted. Since they opened their Apple Stores, sales have soared. I guess Apple's business people know something you don't.

Their sells soared after they introduced the Intel lineup, I wouldn't say that has anything to do with them opening their own retail stores. On top of that their retail stores are only in heavily populated areas (or major tourist locations), so their sales have nothing IMO to do with their stores and more to do with their product.

Hurmoth said,
Their sells soared after they introduced the Intel lineup, I wouldn't say that has anything to do with them opening their own retail stores. On top of that their retail stores are only in heavily populated areas (or major tourist locations), so their sales have nothing IMO to do with their stores and more to do with their product.

I disagree. I think it had to do with the iPod. People figured it was Apple making them.

Their sales have been on the rise long before the Intel transition. Even Wikipedia's article on Apple agrees that their stores have increased sales: http://en.wikipedia.org/wiki/Apple_compute..._New_beginnings

On May 19, 2001, after much speculation, Apple announced the opening of the first official Apple retail stores, to be located in major U.S. consumer locations. These stores were designed for two purposes: to stem the tide of Apple's declining share of the computer market and to counter a poor record of marketing Apple products by third-party retail outlets. The company faced challenges to balance the deployment of its own retail stores with its dependence on, and the demands of, its existing channel partners and dealers. Apple slowly built up the number of stores in the U.S., (now totaling 150) later opening stores in Canada, Japan, United Kingdom, and recently Italy. These efforts in retail succeeded and proved to be very profitable, averaging annual returns of US$4,032 per square foot of every store, the most in retail. These returns bested retail favorites such as Best Buy and Tiffany's.

Time will tell if adding retail (next to the Gateways?) pays off. Some time ago I referred people to Dell for desktops. That changed when they outsourced customer service and seemed to ship PC's with all cheap somewhat flimsy plastic cases/towers. I recommend people look around at local shops that build and ask for an aluminum (or steel) case, etc.

Unfortunately people are not going to pay more to buy from a local PC shop that does not outsource ever part of it's business possible to save a buck. People constantly complain about lack of customer service but still continue to buy a Dell to save some bucks all while helping to outsource jobs left and right

I've not had any problems with DELL's customer support or their case design. I, and the people I know, have had tons of problem by buying computers from local shops.

Dell is definitly an option, but your experience is different--I have not had problems with local shops and most are easy to work with. In my view mass-produced PC's generally have ugly cheap flimsy crowded plastic cases. I wish there were more options/choices. My mother-in-law has a Dell and leaves the front cover off so it won't interfere with her CDR Drive randomly opening and closing. To each his own.

The home versions are one thing (dimensions) but have you looked at the quality of the business class (optiplex ). In all cases the builds are completly different. Have you checked out the difference in support packages, gold vs standard? Gold you talk to a very American speaking person and get a resolution within 15 min. Standard they read from a book and dont really care what you did to troubleshoot the issue, if it is not on the page that they are looking at it didn't happen in their eyes.

I have had issues with both types of vendors. I would much rather deal with a vendor like dell for the simplicity of driver locations and updates. With a build your own shop, it is hit or miss, maybe they used quality components, maybe they used some 3rd party component that they got for 5 bucks or they built it in their basement.

I have a customer who went for one of these companies, spent $3000 for a computer and after he recieved it had to send it back 3 times because the computer wouldn't turn on or recognize the drives. 3 months later he recieved his computer. He did his research with this company and they did this to him, they even sent out a monkey (err, tech) to fix this issue, the monkey (err, tech) couldn't figure out that the little jumper that was sitting on the bottom of the case belonged to the bios jumper and the pc would not run with out it, he had to pack it up and send it back to the manufacturer for them to figure that out. Unfortunatly, I have more stories like this than that of dell, hp, or ibm. I have been designing and implementing networks since May of 1996 and have seen my fair share of issues from all manufacturers.

P.S. I really hate it when the white box creators use different hardware in the same model computers, when using images it makes it a bit harder as you need to have all sorts of drivers for that particular model computer.

I don't know why Michael Dell had to "defend" his decision to go retail. It's smart business sense to want to increase your potential customer base and make it easier for your products to be on display/purchased.

spacer said,
I don't know why Michael Dell had to "defend" his decision to go retail. It's smart business sense to want to increase your potential customer base and make it easier for your products to be on display/purchased.

Yea I was just going to post the same comment... why is it lately everyone must defend their smart business decisions....

I personally think this will pay off for Dell. Hopefully Best Buy and Circuit City are on the list of the next retail outlets to get this deal.