Where does the direct model work?

Selling direct has always been the hallmark of Dell. From a school dormitory, the company has come a long way to being a $ 60 billion enterprise.

Currently, I am reading the book “Direct from Dell”, by the CEO himself. He saw the advantages of going direct, in reaching out to the end customer by passing the middlemen. It was an unconventional approach then. But it worked, and as he mentions, it was too obvious that this would work, for what more could people ask for, when they were getting better value at a lower price?

Catching on the wave of Internet, Dell has expanded all over the globe, with region specific customizations. I had heard, read and understood the Dell model a few years ago, but I used to wonder why wasn’t it in India, the fastest growing economy in terms of IT?

I realized that going direct may not be the ultimate way of selling a product. And the fact remains that not all products can be sold direct to the end customer. When a customer feels okay to wait for 4-5 WEEKS before getting a desktop/laptop, this model can find an acceptance. This model can even work for some other white goods as well. But I understand that in this model, production starts after the product has been customized, so you have tailor made products, albeit with a delay. Not all products can (or needs to) be customized!

People have the urge for seeing and touching the products before buying them. In such a situation, the Internet or telephone is an impersonal channel. Emotional that the people are, they would not like being treated as just another call or an order no..they like to see someone in person, who would remember their name, or their last purchase..something a cookie (on the Internet) cant do that well.

In India, people in general have a general trust on the owner / dealer, rather than the brand. Poor levels of service, coupled with lack of information leaders to greater dependency on the dealer. So the role of the sales channel becomes all the more important.

How many people know about a call center, and what good it can do? And to top it all, waiting for twenty minutes listening to “your call is important to us” is far from satisfying. They would rather take their product and dump a defective product on the seller’s table; implying that it’s their headache now, since they have taken money!
A direct channel can work where the customer doesn’t mind making an advance payment, by her credit card on the Internet / telephone. It gets even more difficult when the concept of going online has only caught on at the elite level. For the majority in India, its just another piece of sophisticated equipment which they don’t understand, leave out exploit the opportunities it provides.

Going towards sophistication, a direct model can work when the consumer KNOWS what she wants to buy. For a complicated equipment like a computer, it may not be an easy task. Peer pressure reins supreme, rumors fly, and one might end up buying something they may not have wanted. But everyone knows some expert in the area, and their recommendations will be worked upon. Often sales persons double up as consultants, which is why the sales channel becomes all the more important.

Possibly these are the reasons for the late entry of Dell into the Indian market, which is quite different from the rest of the world. I found that www.dell.co.in does not have adequate varieties like the www.dell.com does, probably because of limited manufacturing capabilities. With increased awareness (read sophistication), Dell will get more popular in India, provided they keep prices low enough to grab attention!