The Last Word -Michael DELL [Listen to schumcks of listen to the man]
Zeeko:
Here is a nice read in case you have missed it,a bit dated and you may want to adjust some of the numbers here are there.
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ZDnet
December 2, 1998 6:41 PM ET
Dell Computer Corp. is on its way to recording $18.5 billion in 1998, selling directly to customers in person, over the phone and on the Web. When this interview took place at the end of October, 33-year-old Michael Dell still talked in terms of selling $6 million worth of computer products every day over the Web. But two weeks ago, the company revised that number to $10 million per day. Since opening its first Web site in July 1996, the company (www.dell.com) has opened digital stores in 38 countries. And Dell says he's finding that market differences are disappearing with the spread of the Web. Dell spoke with Inter@ctive Week Editor-in-Chief Tom Steinert-Threlkeld.
Last time we looked, you were doing $14 million a day of sales via the Web, worldwide. How much of that is outside the U.S.?
What we said when we reported the $14 million a day number is that we were doing about $1 million a day in Europe. It's somewhat less than that in Asia and Japan.
About $500,000 a day?
A bit less.
How is the acceptance of Web sales progressing outside the U.S.?
About nine months to a year ago, we were saying that the U.S. was about two years ahead of the rest of the world. Now, we're finding it's only about six months to nine months ahead. These markets are catching up quickly.
What is the indicator or indicators you use to know that the gap is closing?
It's things like the percentage of business our customers do online, the usage of Web tools, the usage of Web sites, sales leads generated off the Web.
Recently, we held a conference for our Platinum customers in Europe. These are our biggest customers. Eighty percent registered for the conference online.
Also, about 65 percent of our online sales now come from Premier Pages [Web sites created for specific corporations]. Not too long ago, that was in the single digits.
How widespread are your Web sales efforts now?
We're now selling products online, I think, in about 38 countries. We have Web marketing managers all over the world doing merchandising on our sites and treating this online media in a very unique way.
If you go to our sites, you'll see they're updated all the time in every market with fresh content. This is the first point of contact with virtually all of our customers.
How much do you figure you're saving the large corporate customer?
Ford Motor [Co.] told us that they saved $2 million just in the procurement process. We had one account tell us that they went from having 16 procurement people to now having four involved in buying our product, because of the Premier page.
It makes Dell more efficient. We have an overhead which approximates 11 percent of sales, which is pretty low. But every time a customer goes online and buys a machine instead of calling us on the phone, that number goes down a little bit. We get that much more efficient with every new sale.
What happens to your sales force?
The Internet does not eliminate the need for our field organizations or our inside sales and support teams; it just has them focusing on higher value-add problems, instead of mundane things like order status.
Are there differences in how you have to market on the Web in different countries?
A lot of these are global relationships. Take a company like [Northern Telecom Ltd.]. Nortel operates pretty much the same way all around the world, only they're everywhere you go.
As for differences in local markets, there are differences in each market, but the differences are even less pronounced on the Web than they are in the real world.
We have some markets where a customer won't necessarily be as inclined to pick up a phone and call in response to an ad. They might want to send a fax to get some information first and then make a call. They sort of go through a protocol of communication, before they're willing to engage in a direct conversation.
That phenomenon is less true on the Web. The reality is that it's looking a lot less different every day that goes by.
Why does it get less different every day?
If I look at the way customers look for information and their behavior when it comes to buying or getting support information, in Beijing or Barcelona or Boston or Bophuthatswana or many, many places in the world, what we're seeing is that more and more people are going online all around the world.
The use of the Web is higher in the U.S., but the usage is coming up rapidly throughout the world.
Everybody likes to feel like they're unique, whether they're from one country or another. And they are. However, when they get online, they behave a lot more similarly around the world than in just about any medium.
Why is that?
One hypothesis would be it's the obvious thing to do, and it's a whole lot easier to get the information this way than any other way they've experienced. And, in a sense, the Web is a self-selection for those users who have figured out what the smartest and easiest way is to get the information.
Clearly, there are differences in value-added tax and currency and things like this, regulatory approvals, unique products, unique language requirements, special requirements for keyboards that require unique marketing, the Euro -- these are unique, but they are not unique to the online world.
Are there differences in how you market your Web sites?
We use the same techniques to pull people into Dell.com around the world that we have in the U.S., which is in advertising, in all our promotions and in just about any printed media, you have Dell.com featured prominently, and [that] pulls people into the site.
Are their customer differences?
In Japan, we have a higher rate of customers who are willing to enter their [bank] card numbers on the Net than in any other country. We are seeing security concerns subside.
Is the Asia slowdown affecting you yet?
We are still growing much faster than the market there. Second-quarter growth was 34 percent for Asia and Japan. The Web is growing faster.
What about elsewhere?
In Europe, we grew 73 percent last quarter. We had three countries grow more than 100 percent.
We've just opened a new factory in China, where we are also totally online. So, a customer in Shanghai can order a PC online. The order will get shipped electronically to our factory. The machine will be built in China and shipped right to the customer -- all an in-China transaction.
How do you reach work forces?
One of the very interesting aspects of the Web has been the implementation of employee purchase programs, where a company can extend a benefit to its employees in the form of being able to offer Dell PCs at a pretty favorable price. Some of these programs are incentivized by the company with such things as low-cost or interest-free loans, the inclusion of special software or peripherals that the company may want to induce the employee to have to become a more capable user.
In Sweden, there have been special tax laws that have been implemented. There is a high tax rate on income and a high tax rate on consumption. Those taxes are, in effect, waived when you buy a PC. We went from 8 percent market share to 18 percent market share in one quarter while the market was growing 70 [percent] or 80 percent. Winning the employee purchase programs for [AB] Volvo, [Telefon AB L.M.] Ericsson [and the like] meant tens of thousands of units per company.
What percentage of your overall sales do you expect to be international in the year 2002?
We drive about 35 percent of our sales outside the U.S. The challenge for us is that our U.S. business has still been growing very, very quickly. When your U.S. business grows 50 percent [year over year], it's very hard to change the percentage [of international sales] very dramatically. Our goal would be to have more than half our business outside the U.S. in several years' time. Interestingly enough, the percentage has not changed that much over the last seven or eight years, because the U.S. continues to grow at such an incredible rate. Even with huge expansion outside the U.S., the U.S. still keeps growing, and we're not going to tell the U.S. guys to slow down.
Your goal is to have 50 percent of your sales come from the Web by the end of 2000. Is that also true internationally?
It's a global goal.
What have you learned so far?
This is a global phenomenon. It is not a country-specific phenomenon. Dell.com is spoken everywhere in the world.
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