Direct Sales That Bite You Later

Dell Computer’s direct sales model destroyed many computer sales stores locally in the US. The model was ground breaking. However, when you are doing business you have to be thinking ahead and thinking about the possible results of your actions. With the failure of many businesses due to Dell’s cheap, direct sales model Dell was very successful in building its business. Unfortunately, while Dell was selling direct, HP, eMachines, and many other firms were still taking care of their sales channels. That has paid off. HP has recently surpassed Dell in market share. Dell is struggling. Dell is beginning to rethink their sales model according to an article in the New York times.

Is this the end of Dell? Probably not. However it is a strong reminder that we should always make an effort to do business with others with win-win in mind. Dell upset a lot of business people on the retail level. On the enterprize level, I know our company prefers to avoid the use of Dell servers just because HP makes them so much better.
-Our engineers have commented that they don’t like Dell’s hardware because you can see “cheap” in the manufacturing.
-The mother boards are sub-standard and flimsy.
-Even the number of screws are barely enough to mount servers in their Dell OEM racks, while other manufacturers give you plenty to spare.
-Sales staff (account managers) change quicker than the weather in Seattle.

It looks like Dell has hit its plateau. Will they actually provide better service to woo back the people that they alienated by undercutting and skimping on the parts? We’ll see. In Japan, once you burn your bridge in business it is pretty hard to rebuild it. Tumbleweed is working to do that right now in a market they abandoned with the dot com bubble bursting. In Japan, Dell Computer lost a number of their staff to work at Lenovo Japan in recent months. It seems to be a coup of sorts.

As for Dell, I think it really comes down to what you do when no one is looking. Many retailers don’t want to stock Dell products on their shelves because they feel that Dell was busy stealing business instead of helping their shops sell computers and peripherials. Dell has proven to be competitor in business and not a partner as the other computer companies have been. Congratulations to HP who has made an effort to do win-win business all around. They have won the marketshare wars for now. Good business is win-win business. What you do behind the scenes is just as important as what you do in front of everyone.

Let’s watch and see how things turn out. However, this is a clear example of short-sighted, sales number focused, American company. This is a good model to avoid. These days, technology and communications have made things so transparent that we need to be thinking long-term about the consequences of our actions. You can’t slap the person by selling direct to the customer and then go back expecting him or her to receive you with open arms.

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