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  • Essay / Dell's e-commerce model - 1326

    Since its launch in the mid-1990s, Dell's e-commerce business has been an example of the benefits of online sales, says Aberdeen Group analyst Kent Allen. The company's strategy of selling over the Internet – without outlets or middlemen – has been as discussed, admired and imitated as any e-commerce model. According to Allen, Dell's online sales channel has been so successful that the computer industry must ask itself: "Does the consumer still need to go to the store to buy a PC?" » Regardless of the company's past success, Dell is affected by two current trends in e-commerce, says Carrie Johnson, an analyst at Forrester. And only one of these trends works in favor of the PC giant. Early adopters have always been comfortable buying PCs online, she notes, but the general public has been slow to catch up. "What we know about how consumers shop online is that they start with low-cost, low-risk products like books, and eventually begin to trust the Internet more and evolve towards high-end products like computers and travel." “Enough consumers have been shopping online for three years or more to trust the Internet to buy almost anything,” Johnson says. "That's why clothing is doing so well today, and even computers, because it's not just early adopters buying online. We've caught the second wave of online shopping." But while that trend bodes well for Dell, Johnson says, another does not: due to a slowdown in PC sales, which is fueling most of the growth online [in the PC market] at the Right now, it's used computer sales. Auction sites like eBay and uBid are seeing thriving growth rates in PC sales, she says, unlike newer PC vendors like Dell. The challenge for Dell now is to find a way to increase its sales in a difficult market. The Front End Launched as a static page in 1994, Dell.com moved into e-commerce soon after, and by 1997 it was the first company to record $1 million in online sales, according to the Front End. -Dell spokesperson Deborah McNair. After six solid years of online sales – widely considered by analysts to be flawless – Dell has racked up some impressive statistics. During the last quarter of 2002, Dell.com recorded one billion page views, a first for the company. According to Dell spokesman Bob Kaufman, about half of the company's revenue comes from the site, meaning about $16 billion passed through Dell..