Upstarts Spur Dell to Polish Sales Model

The world's largest PC manufacturer, Dell revealed for the first time last week, how big a force it has become in the e-commerce world since selling its first computer at Dell.com 10 years ago.

Dell's website is generating about $ 16 billion (U.S.) of sales every 12 months, John Hamlin, senior vice-president of global on-line business, announced last week at the company's headquarters in Texas.

This figure is almost twice as much as Amazon.com Inc. which is one of the world's most popular e-commerce companies, reported last year.

The figure also mentions a healthy 29 per cent of Dell's total revenue of $ 55.9 billion for the fiscal year ended Feb. 3. and Mr. Hamlin estimates that the website touches as much as 80 per cent of the company's business in some way, as customers click through it for information.

Despite the amount of money Dell.com pulls in, the company has spent the last nine months overhauling the web operation, rolling out a redesign in May and promising further changes this year.

The move comes as the company faces more competition from Hewlett-Packard Co. and China's Lenovo Group Ltd., and as it deals with weakening sales to individual consumers, who account for about 15 per cent of business. For the first time in years, Dell has been growing more slowly than the rest of the PC industry in the United States, its biggest market.

Profit fell 18 per cent in the first quarter from a year earlier, to $ 762 million, and revenue grew by a slim 6 per cent to $ 14.2-billion. However, sales of desktop PCs actually declined by 3 per cent.

Dell executives, presently, are looking to website improvements to help the company return to double-digit growth. Dell.com is also looking forward to bigger promotions of actual products. Large images of PCs, servers, flat panel televisions and printers are splashed across the site, replacing discount promotions that used to dominate many of the pages.

Today, some of the company's newer offerings, such as televisions, leave customers wanting a greater sense of touch and feel before they commit. So Dell has replaced static menu lists with interactive features, such as the ability to get 360-degree views of products. There are now also audio and video displays.

“We are trying to get things as close as we can to the physical without people actually being able to touch the product,” Mr. Hamlin said.

There is also a new on-line tool called DellConnect that allows Dell technicians to help customers by remotely accessing their PCs to fix a problem. Early use of DellConnect has shown a 95-per-cent satisfaction rate among customers, the company says.

It has just launched in the U.S. and will roll out globally in 12 languages over the next 60 days, says John Medica, senior vice-president of Dell's product group.