<India> Dell-An inverview with John Legere,President(Asia/pacific)Dell Corp.
Apratim:
Here is an article I saw in Business Standard.As you can tell DELL is an insignificant player in the Indian market,looks like they have a long way to go while Dogpaq,IBM,and HP have established themselves as the major players in India besides the WIPRO.
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Coming to a desk near you
John Legere, president, Asia-Pacific, Dell Computer Corporation explains to Nitin Srivastava how the company's direct selling model works in relatively immature PC markets
“In every market that we have gone to, we were told that direct selling does not work here," remarks John Legere, president, Asia-Pacific, Dell Computer Corporation. Before you can say, 'Yeah, that should be true for India too', he quips: "It has worked in every market so far."
Well, the first time Dell tried to sell in India, nearly five years back, it made a hash of it. Its high-end machines found few takers, even though Dell had tied up with the biggest PC company in the country, PCL. "Dell is a different company today, much bigger, more mature, and we know how to approach new markets today," he says.
Legere certainly has the right credentials for the job. His last assignment was to set up the telecom business for AT&T in India. The joint venture with the Birla Group, he says, taught him a lot about the Indian market. Was poor business returns one of the lessons? "No, AT&T's case is different. Their battle has shifted home, so they have become cautious about investments in other markets."
"Whereas Dell aspires to be the top PC company in a few years. And to reach that goal, Dell needs Asia," he says. Dell has grown to a colossal size today with revenues hitting the $ 20 billion mark in 1998. It is now the number two PC company in the world. "When Michael [Dell] called me for this job, I told him that any answer about Asia or even India should only be about 'when' and 'how'. Anyone who is talking in terms of 'if' does not understand market growth."
But is Asia ready for Dell's direct selling model? Of picking up the phone and ordering a custom-built PC. Three months back, Dell set up its second assembly unit in Asia, in China. (Its other factory is in Penang, Malaysia.) "Our business model is tricky. The factory does not build anything unless we go out and sell," he points out. Within five weeks, the China factory was struggling with an order backlog.
So how does Dell's model of selling high-end machines, and that too through the phone or internet, work in relatively immature PC markets? Direct selling may have captured everyone's fancy, but Dell is making rapid inroads in new markets following another simple strategy: lead into new markets through high-end machines which are targeted at Dell's global customers.
"Basically, now that we are a bigger company, we have a bigger base of customers," he says. And that base is leveraged to the hilt. Nearly 70 per cent of Dell's sales are made to very large customers (those who buy more than $1 million PCs every year). "Whichever markets these customers go to, we have to service them."
The first base established, Dell's marketing team then moves in to identify large corporate accounts in the local market. The marketing activity is based on face-to-face selling but the actual selling is done through distributors.
As the volumes begin to pick up, new segments are explored. A preferred accounts team is created which does telemarketing. For every five customers, there is one tele-salesperson. And finally, there are one-off transactions with the small and medium enterprise segment, which are handled through tele-marketing and the internet.
"People don't realise it but this way we build an extremely rich database about what customers need, their expectations, change in trends etc, which we can immediately implement at our factories," says Legere. With customised machines, pre-loaded software, and lower prices due to better inventory management, these factors help Dell ramp up its sales in new markets quickly.
For large companies, Dell has created customised web-sites accessible only to the employees of that company. "So the Bangalore office of Shell can go to the site, know what products are available, what they are authorised to buy, and place an order directly. It saves so much time and money in reducing transactions," he says.
So when will India see direct selling from Dell? "We don't decide to be indirect. It is a state we are forced to be in, selling through distributors until volumes are big enough to justify direct selling," he says. What happens to the distributors when Dell goes direct? "In China, Dell is covering only nine cities through direct selling. The distributors have moved out to areas which we do not cover directly."
Selling less than 5,000 PCs annually, it will be a while before the famed Dell direct model comes to India.
business-standard.com |
