Though Dell Computer (DELL) is already racking up an industry-leading $3 million a day in Internet-based sales, future online sales could soar well beyond this figure thanks to an aggressive new strategy in the works.
The strategy calls for Dell to launch, by the end of the year, dedicated Web sites for its large corporate, government, and educational customers. These sites, which will provide purchasing capability, technical support, and company-specific pricing information, will open Dell's Web store to the customers that account for at least 90 percent of the company's annual sales, estimated to be $12 billion.
"The $3 million figure is just the tip of the iceberg," said Dell spokesperson Bill Robbins.
Even the tip of the iceberg is impressive, demonstrating the perfect fit of the direct sales model and the Internet.
"It's just about the cheapest way to sell the systems that they could possibly ask for," said one analyst, who did not want to be identified. "And Dell is doing an exceptional job with it. They are leading the charge," he added.
Not all of those Dell counts as its online customers actually order machines through the Internet. Some use the Web site to configure the system and then call a service representative to order and pay. But even in those cases, Dell says its Web site has saved it money.
"If a customer were to call and start from scratch, the result would be four to five phone calls. But with customers who start on the Internet, their sales can generally be closed in one call," said Robbins.
That economy benefits not only sales but support. The Dell site has more than 35,000 pages of technical support content and receives about 60,000 visitors per week, according to Robbins. This month the company also will launch a "push" channel for service, support, and equipment upgrades. (See related story)
But the union of the Internet and the direct sales model may pose some risks for vendors.
"I think it's good to have someone spend their own time in the shopping and information-gathering phase," said Bill Schaub of Dataquest. "But I'd think that ultimately you'd like to talk to the customer live to correct the configuration if they've done it incorrectly, and to try and sell them something else."
But Robbins says online customers, who tend to be experienced computer users, are buying high-end systems already. "Customers buying over the Internet are concerned with issues like obsolescence," he said. "They're 'upselling' themselves."
Furthermore, the Internet seems to be doing a fairly good job as a salesperson. Customers who have visited the Web site are about 50 percent more likely to purchase a computer than those who haven't when they phone the company, said Robbins.
Meanwhile, Dell's competitors are looking at the company's success online and are replicating it to some degree. Both Gateway and Micron have set up successful online stores. And resellers like CompUSA are getting into the act as well.