One example of how companies can review and revise their business model is provided by Dell Computer. Dell
advantage in the mid‑ 1990s when it became one of the first companies to offer PCs for
sale online. Its sales of PCs and peripherals grew from the mid‑ 1990s with online sales of $1 million per day to
2000 sales of $50 million per day. Based on this success it has looked at new business models it can use in
combination with its powerful brand to provide new services to its existing customer base and also to gener‑
ate revenue through new customers. In September 2000, Dell announced plans to become a supplier of IT
consulting services through linking with enterprise resource planning specialists such as software suppliers,
systems integrators and business consulting firms. This venture enabled Dell’s Premier B2B customer extranet
to be integrated into the procurement component of ERP systems such as SAP and Baan, thus avoiding the
need for rekeying and reducing costs. Dell Business Solutions is now an important contributor to its business.
In a separate initiative, Dell launched a B2B marketplace (formerly www.dellmarketplace.com) in mid‑
2000 aimed at discounted office goods and services procurements including PCs, peripherals, software,
stationery and travel. This strategic option did not prove sustainable, but it was able to test a model and then
move on – it closed the marketplace after just 4 months! This was Dell’s dot‑ com disaster. However, it does
offer Dell Outlet, a relatively low‑ cost purchase method for returned, refurbished PCs.
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Part 2 Strategy and applications
More recently, in 2007, Dell launched IdeaStorm (www.ideastorm.com), a site encouraging user participa‑
tion where anyone can suggest new products and features which can be voted on. Importantly, Dell ‘closes
the loop’ through a separate ‘Ideas in Action’ section where it updates consumers on actions taken by the
company. As well as improvements to customer service, it has explained how it has introduced systems with
a non‑ Windows Linux operating system in response to suggestions on IdeaStorm. In 2008 Dell also had a raft
of online options to engage with customers and other partners, including:
●
A corporate blog, Direct2Dell (www.direct2dell.com), which is ‘a blog about Dell products, services and
customers’.
●
Studio Dell (www.studiodell.com) ‘designed to help you get the most from your Dell experience’.
●
A brand channel on YouTube (www.youtube.com/DellVlog).
●
Dell Community/Dell Conversations (www.dell.com/conversations) ‘interactive ways for you to share and
learn with others and with us’.
●
Premier (http://premier.dell.com), which is a customised procurement portal (extranet) for larger businesses.
Less radical changes to revenue models that are less far- reaching may nevertheless be
worthwhile. For example:
●
Transactional e-commerce sites (for example Tesco.com and lastminute.com) can sell
advertising space or run co-branded promotions on-site or through their email newslet-
ters or lists to sell access to their audience to third parties.
●
Retailers or media owners can sell-on white- labelled services through their online pres-
ence such as ISP, email services or photo- sharing services.
●
Companies can gain commission through selling products which are complementary (but
not competitive to their own). For example, a publisher can sell its books through an affili-
ate arrangement with an e-retailer.
●
Brands who are manufacturers can sell direct or encourage purchase through integrat-
ing a marketplace or ‘where to buy’ service. For example, consumer and B2B manu-
facturer 3M now offers a store for consumers, but not for its full range of products
(Mini case study 5.4). Consumer pet- food brand Royal Canin now offers the option to
buy online via its local stores in a marketplace. Similarly, phone manufacturer Nokia
has developed an online marketplace for purchase of its products from different phone
operators. These systems require deep integration between manufacturer and retailer
systems.
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