NEW YORK--To reach its stated goal of building online sales
to 50 percent of its total, Dell
must persuade its large customers to make their purchases on the Net, rather than rather by phone or mail
order, CEO Michael Dell told an Internet commerce conference today.
"Consumers and small customers have been the strongest drivers," Dell told attendees of the Internet and Electronic Commerce show here today. "Now we are taking relationships with the largest companies--Ford, Shell, British Telecom, and Nestle, and moving those relations from physical to electronic orders."
Of Dell's total sales, 70 percent are from large companies. To lure those buyers online, the company has created 2,000 custom
pages on its Web site with information they would otherwise need to collect themselves, including news on electronic commerce.
"That lets our people and theirs to spend less time on routine tasks and more [time] on more complex and challenging tasks," Dell added. In addition, it gets large buyers in the habit of visiting Dell's Web site and eventually, Dell hopes, buying there too.
Dell's run rate for Web sales is $1.5 billion a year, and the site is drawing visitors at a rate of 85 million annually, the CEO said. The site is localized in 42 countries and 12 languages, and it's most popular in Japan, where 40 percent of Dell consumer sales are online.
But sales aren't the Internet's only benefit to Dell. "One of the unsung heroes for Dell is our ability to provide support information," he noted. "We have changed our entire IT strategy to be Net-oriented, so customers can receive the same information as our customer support teams." Some 100,000 customers a week now use Dell's site for technical support, thus cutting the support costs.
Integrating its suppliers into its Internet operations is Dell's "next frontier," he said. That task is made easier because the top 20 suppliers to Dell account for 85 to 90 percent of its materials. "By building links to those suppliers, we cover the bulk of the opportunity."
Although Microsoft claims Dell as a reference account for its e-commerce software, most of Dell's Web site required custom development, Dell added.
In other comments, Dell said the following:
The most effective way Dell has driven traffic to its Web site is by printing its URL on everything it prints.
The arrival of the Euro as a common currency in Europe will
simplify doing business there. "Any effort to consolidate currencies we see as a positive thing."
Dell's direct sales model is well suited for the Internet. Without indirect channel partners, Dell doesn't experience "channel conflict" that faces other vendors that try to sell off their Web sites. "We'd love to have 100 percent Internet sales."
Separately, Dell and Intel announced a joint development pact on Internet and enterprise computing technologies. The agreement will focus on moving customers and software developers to Intel's 64-bit chips, enhancing Intel-based workstations, moving ISPs to Intel's chips, and promoting business use of the Net.