At that time, Dell was taking orders by fax and snail mail and losing money. Losses reached over $100 million by 1994. The company was in trouble. The Solution Direct Marketing Online. The centralization of the Internet In the early sass and the Introduction of the World Wide Web In 1993 provided Dell with an opportunity to expand rapidly. Dell implemented aggressive online order taking and opened subsidiaries in Europe and Asia. Dell also started to offer additional products on its website. This enabled Dell to batter Compact, and in 2000 Dell became number one In worldwide PC shipments. At that time,
Internet sales topped $50 million per day (about $18 billion per year). Today, Dell (dell. Com) sells about $62 billion a year in computer-related products online, from network switches to printers, employing over 88,000 people. Direct online marketing is Dell’s major electronic commerce (CE) activity. Dell sells to the following groups: Individuals for their homes and home offices Small businesses (up to 200 employees) Government, education, and health care organizations Sales to the first group are classified as business-touchstone (BBC). Sales to the other three groups are classified as business-to-business (BIB).
Consumers shop at dell. Com using an electronic catalog. The sales are completed using mechanisms described in Chapters 2 and 3. In addition, Dell sells refurbished Dell computers and other products at electronic auctions (delectation. Com). Online auctions are an important sales channel. In 2006, Dell opened physical stores, mainly in reaction to customer demands. Business-to-Business CE. Most of Dell’s sales are to businesses. Whereas BBC sales are facilitated by standard shopping aids (e. G. , catalogs, shopping carts, credit card payments; see Chapter 2), BIB customers obtain additional help from Dell.
Dell provides each of its nearly 100,000 business customers with Premier Dell service. For example, British Airways (BAA) considers Dell to be a strategic supplier. Dell provides notebooks and desktops to 25,000 BAA users. Dell offers two e-procurement services to BAA purchasing agents. The more basic service, Premier Dell, allows BAA (and other businesses) to browse, buy, and track orders on a Dell website customized for the user’s requirements. The site enables authorized users to select preconceived PC’s for their business unit or department. A more advanced version, Premier BIB, supports e-procurement systems such as those room Arabia.
This provides automatic requisition and order fulfillment once an authorized user has chosen to buy a PC from Dell. BAA has placed the e-procurement tools on its E-Working intranet. This allows authorized staff to purchase PC’s through a portal that connects directly to Dell’s systems. In addition to supporting its business customers with e-procurement tools, Dell also is using CE in its own procurement. Dell developed an e-procurement model that it shares with its business partners, such as BAA. One aspect of this model is the use of electronic tendering to conduct bids (see Chapter 4).
Dell uses electronic tendering when it buys the components for its products. In 2000, Dell created a BIB exchange at dell. Bib. Com. This venture was a failure, like most other exchanges (see Chapter 4). E-Collaboration. Dell has many business partners with whom it needs to communicate and collaborate. For example, Dell uses shippers, such as UPS and Fed, to deliver its computers to individuals. It also uses third-party logistics companies to collect, maintain, and deliver components from its suppliers, and it has many other partners. Dell is using Web Services, an CE facilitate BIB integration.
Integration efforts began in 2000 with other technologies when Dell encouraged its customers to buy online. The BIB integration offer combines Dell Powered servers based on Intel architecture and webmasters BIB integration software to link customers’ existing ERP (enterprise resource planning) or procurement systems directly with Dell and other trading partners. In addition, Dell can provide e-procurement applications and consulting services. Dell also educates customers in its technologies and offers suggestions on how to use them. This is particularly true for emerging technologies such as wireless.
Finally, Dell has a upper communication system with its over 1 5,000 service providers around the globe. E-Customer Service. Dell uses a number of different tools to provide superb customer service around the clock. To leverage customer relationship management (CRM)?a customer service approach that is customer centered for lasting relationships? Dell provides a virtual help desk for self-diagnosis and service as well as direct access to technical support data. In addition, a phone-based help desk is open 2417. Customers can also arrange for a live chat with a customer care agent.
Product support includes troubleshooting, user guides, upgrades, unloads, news and press releases, FAQ, order status information, a “my account” page, a community forum (to exchange ideas, information, and experiences), bulletin boards and other customer- to-customer interaction features, training (continued) 1-1 1-2 Part 1: Introduction to E-commerce and E-Marketplaces ONLINE FILE WI . 1 (continued) books (at a discount), and much more. Dell also offers educational programs at learnedly. Com. Dell keeps a large customer database. Using data mining tools, it learns a great deal about its customers and attempts to make them happy.
The database is used to improve marketing as well. Intricateness CE. To support its build-to-order capabilities, significantly improve its demand-planning and factory execution accuracy, reduce order-to-delivery time, and enhance customer service, Dell partnered with Accentuate to create a new, high-performance supply chain planning solution. Now in place in during the first 12 months of operation, enables Dell to adapt more quickly to rapidly changing technologies and the business environment, maintaining its position as a high-performance business.
Dell also has automated its factory scheduling, demand-planning capabilities, and inventory management using information technology and e-supply chain models. Affiliate Program. Dell provides affiliate partners the opportunity to link from their websites to Dell. Com. Dell pays 2 to 4 percent on any qualified sale made from clicking on Dell’s link at the partners’ sites (referring buyers). The Results Dell has been one of Fortune’s top five “Most Admired” companies since 1999, and it continuously advances in the rankings of the Fortune 500 and the Fortune Global 500.
Dell has over 100 country-oriented websites, and profits are nearing $3 billion a year. If you had invested $10,000 in Dell’s initial public offering (PIP) in 1987, you would be a millionaire Just from that investment. In 2006, Dell opened physical stores to match its competitors and customer demands. (Its major competitor is HP. In 2006, HP regained its “top PC maker” position, leaving Dell in second place and stayed in the lead through 2008. ) Michael Dell returned to the CEO position in 2006, and a restructuring of the company began shortly thereafter.
All sales to businesses will be managed centrally, rather than from three regional headquarters around the globe. The company cut its workforce by 8,000 2009. Still, over 95 percent of its business is online and through mail orders. It also launched a blob called Directly (en. Community. Dell. Mom/blobs/directly). Dell also is expanding its business not only in the computer industry but also in consumer electronics. It is clearly an example of CE success. Questions 1. List all the type of CE transactions used by Dell. 2. List the business models used by Dell. 3. List the competitive advantage of Dell over brick-annotator competitors.
REFERENCES FOR ONLINE FILE WI . 1 dell. Com (accessed February 2011). delectation. Com (accessed February 2011). 2008. Reuters. Com/’ article/abstruseness/idUSWNAB624720081231 ? Petty=IRS&feedName=businessNews (accessed April 2011). National Christina Foundation. “Dell Recycling. ” Christina. Org. Raisins. Org/dell. HTML (accessed January 2011). 1-3 ONLINE FILE WI . 2 COMPASSION. COM?STUDENT ENTREPRENEURS Compassion. Coma’s recipe for success was a simple one: Provide interactive menus to college students, using the power of the Internet to replace and/or facilitate the traditional telephone ordering of meals.
Launched at the University of Pennsylvania (Penn), the company takes thousands of orders each month for local restaurants?bringing pizzas, hoagies, and wings to the Penn community and to dozens of other universities. Founder Michael Saunders began developing the site (compassion. Com) in 1997 while he was a Junior at Penn. With the help of some classmates, Saunders launched the site in 1998. After graduation, he began building the company’s customer base. This involved expanding to other universities, attracting students, and generating a list of restaurants from which students could order food for delivery.
Currently, some of these activities are outsourced to a marketing firm, which enabled the site to add dozens of schools nationwide. In 2004, the company served 200 schools linked to over 1,000 restaurants. Financed through private investors, friends, and family members, the site was built on an investment of less than $1 million. For comparison, another company with services also reaching the college-student market invested $100 million. ) Compassion. Coma’s revenue is generated through transaction fees?the site takes a 5 percent commission on each order from the sellers (the restaurants). When you visit Compassion. Mom, you can: 0 Navigate through a list of local restaurants, their hours of operation, addresses, phone numbers, and other 0 Browse an interactive menu. The company takes a restaurant’s standard print menu and converts it to an electronic menu that lists every topping, every special, and every drink offered, along with the latest prices. Bypass “busy’ telephone signals to place an order online, and in so doing, avoid miscommunication. 0 Get access to special foods, promotions, and restaurant giveaways. The company is working to set up meal deals that are available online exclusively for Compassion. Mom customers. 0 Arrange for electronic payment of an order. University students who signed up at Titan Poker with a special bonus code provided by Compassion. Com were eligible to play in a series of exclusive online poker tournaments (in April 2006). Winners received special Compassion Cash coupons valued at $20,000, redeemable for food orders t participating restaurants. 1 . Classify this application by CE transaction type. 2. Explain the benefits of Compassion. Com for its student customers and for the restaurants it represents. 3. Trace the flow of digitized information in this venture. . How does the outsourcing of the marketing activities contribute to the business? 5. What is the benefit of the Titan Poker contest to the company? REFERENCES FOR ONLINE FILE WI . 2 compassion. Com (accessed April 2011). Medicare. “Titan Poker Teams Up With Compassion for Tournaments Aimed at College Students. ” February 16, 2006. Medicare. Com/releases/2006/2/emw346598. Tm (accessed February 2011). 1-4 Online File WI . 3 Major Characteristics of Web 2. 0 The following are representative characteristics: 0 User-created content (self publishing). The more popular and valuable a Web 2. Site becomes. 0 Unique communication and collaborative environment. 0 Making data available in new or never-intended ways. 0 Web 2. 0 data can be remixed or “mashed up,” often through Web Services interfaces, much the way a dance-club DC mixes music. 0 The presence of lightweight programming techniques and tools lets nearly anyone act as a developer (e. G. , wise, blobs, IRS, and podiatrist). The virtual elimination of software-upgrade cycles makes everything a perpetual beta or work in progress, and allows rapid prototyping using the Web as a platform. Unique sharing of content or all media. 0 Networks as platforms, delivering and allowing users to use applications entirely through a browser. 0 Open source architecture, which makes connectivity to computing resources simple. 0 Users own the data on the site and exercise control over that data. 0 An architecture of participation and digital democracy encourages users to add value to the application as they use it. 0 New business models are created. A major emphasis on social networks. 0 A rich interactive, user-friendly interface based on Ajax or similar frameworks.
On PC’s, cell phones, electronic billboards, and televisions, millions of viewers worldwide watched him win the event by . 01 seconds. The results appeared on the screens almost in real time. If you did not see this exciting race, you can access it on Youth. This was only one component in the “most wired,” or digital, Olympics. The Problem It was not an easy task to manage 42 events in seven different cities in China. Competition results had to be displayed worldwide not only on PC’s and televisions, of cities, and on millions of tiny mobile device screens. But, this was only one problem.
The Olympic organizers also had to manage the logistics of the participants and address the requirements of the media, while also accommodating over 100 million tourists. The following are some of the specific requirements that the Beijing Olympic organizers had to meet: 0 Record the performance of all athletes and determine the winners instantly, sometimes based on millisecond differences. These results then had to be disseminated around the globe in real time. 0 China hosted about 300,000 athletes, referees, trainers, Journalists, and other workers from more than 200 countries, speaking dozens of languages.
All needed to have accommodations, transportation, and food. 0 Nearly 8 million visitors from abroad and close to 120 million domestic travelers attended the Olympics. They needed accommodations, transportation, and so forth. 0 Tickets to all events had to be issued, many in advance, and to people in other countries. Protection against counterfeiting was necessary. 0 Approximately 1,000 percent more Web-delivered videos were needed in 2008 than were needed by the 2004 Olympics. 0 The organizers anticipated a greater than 1,000 percent increase in page views, and even more in video watching. Sufficient infrastructure had to be in place. In real time, the system had to collect and filter more than 12 million monitored events and identify potential security threats. 0 Real-time, transoceanic coverage, including digital videos, required sophisticated hardware, software, and networks. 0 Many visitors preferred to shop online and have Olympic souvenirs shipped to their homes. 0 Overall, it was necessary to securely process more than 80 percent more information compared with the 2004 Olympics in Athens, Greece. 0 Traffic in Beijing can be a major problem and is a major air pollutant, so monitoring ND controls were needed to minimize it.
These problems and requirements can be classified into seven categories: 2. 3. 4. 5. 6. Information collection and monitoring Information dissemination to the world Tickets and souvenirs management Food and supplies along the supply chain Security and privacy monitoring and protection Transportation and pollution control Social networking for the public The $4 Billion IT and CE solutions To address the administrative problems Just discussed, as well as many others, the organizers employed the latest information technology tools, including electronic commerce.
To explain how this was done, the seven requirements are shown in the following exhibit (left side), which also shows the e-commerce solutions used (right side). The following major e-commerce solutions were implemented: 0 The instant display of the results was possible due to the use of sophisticated photo-finish cameras and computers. The system was capable of identifying winners accurately even when the difference was only milliseconds. 0 The International Olympic Committee (OIC) launched a Youth channel to broadcast clips that were accessible in 77 developing countries (but not in the United States).