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03/03 04:15 Dell to introduce online consumer superstore
By Eric Auchard
NEW YORK, March 3 (Reuters) - Dell Computer Corp. [DELL-news],
the world's top direct seller of personal computers, plans to diversify
on Wednesday by introducing an online superstore to sell
computer-related products of other firms.
Dell's consumer shopping site, to be known as Gigabuys.com
(http://www.gigabuys.com), marks a renewed push by the direct
computer distributor into consumer, as opposed to business,
markets, where it will be selling PC software, peripherals and
accessories.
Currently only 15 percent or so of Dell revenues comes from
consumers, with the remaining 85 percent coming from business
sales.
More fundamentally, the move marks the evolution of the Round
Rock, Texas, company away from its roots as principally a
manufacturer and distributor of PC hardware and peripheral
components products, analysts said.
Dell itself sees the Internet store concept as a way to reinforce ties
with existing customers, building repeat sales of related computer
items, and attract new customers, all with the goal of winning
follow-on PC box sales.
"Gigabuys.com offers all online computer shoppers a convenient way
to buy all the software and accessories they need for their
computers," Michael Dell, chairman and CEO, said in a statement
obtained late on Tuesday.
"This includes not only Dell's existing customers, who we hope to
deepen our relationship with through www.gigabuys.com, but also
customers who haven't yet bought from Dell and are looking for the
best online shopping experience."
Eventually, analysts said, Dell could resemble a service company or
an online retailer of various goods rather than a manufacturer if prices
-- and profit margins -- on Dell's classic PC boxes continue to fall.
Dell is not alone. Rival direct PC supplier Gateway Inc. [GTW-news]
has already expanded its consumer offerings beyond classic
hardware sales by introducing its Gateway.net Internet service,
offering customer financing, and other programs.
Last week, Gateway joined forces with NECX, a privately held online
electronics store, to develop a new site, called SpotShop.com
(http://www.spotshop.com), that plans to sell Gateway-branded
products, along with software and hardware from other suppliers. In
return, Gateway acquired roughly a 20 percent stake in NECX.
While Gateway has turned to outside partners, Dell is to build its own
sites, developing the Gigabuys.com with an in-house team that also
is working on projects for its small, medium-size and large business
and government markets.
Top personal computer maker Compaq Computer Corp. [CPQ-news]
is pursuing its own Internet sales plan, but conflicts among key retail
sales partners and newer Internet-only retailers have led it to suspend
sales to the newer outlets temporarily.
Industry analysts see a shift in the PC business to sales of
consumer electronics and other low-cost commodity goods instead
of high-powered, costly PCs, even as online hardware sales rise to
$15 billion in 2003 from $1 billion in 1998.
"This is the beginning of companies like Dell and Gateway migrating
from being manufacturers to retailers that sell their own products and,
more importantly, those of others," said Eric Brown, an analyst at
market research firm Forrester Research.
Dell said its goal was to create the top shopping destination for
computers and related products on the Web.
Gigabuys.com is set to offer initially more than 30,000
computer-related products and services from 850 companies. Later
this year, Dell plans to offer more than 40,000 products on the site, it
said.
The consumer site has printers, digital cameras, hand-held
computers like 3Com Corp.'s [COMS-news] Palm series, scanners,
games, and imaging and educational software, as well as such
business products as cables, computer docking stations and
network equipment.
Unlikely some shopping sites, which force buyers to consider only
selected goods -- making it difficult to comparison-shop -- Dell
promises to allow shoppers to search for products by category,
manufacturer, product model, features and price.
Dell promised to offer extremely combative pricing on popular
products.
Later this year, Dell plans to extend the superstore concept through
customized versions of the site delivered to its corporate buyers and
other customers, Dell said.
Gigabuys.com will be available initially in the United States and will
be extended internationally later this year, it said.
The Internet superstore is part of Dell's commitment to generate 50
percent of revenues through the Internet within 18 months. Currently,
its Dell.com site sells $14 million each day over the Internet, or 20
percent of total revenues.
Ahead of Dell's announcement, personal computer stocks continued
to fall as investors reacted to recent signs of weakening first-quarter
PC sales following Compaq's warning on Friday of a sales slowdown
during the first six weeks of 1999.
Dell slid another $2.50 to $78.06 in active Nasdaq trading, while
Gateway fell $2.56 to $68.44 and Compaq gave up $1.59 to close at
$31.94 in composite U.S. stock exchange trading. |
