Dell retail model may be benchmark: Gartner

After having depended largely on direct online marketing since 1990s, Dell's personal computers (PCs) are now on sale in Wal-Mart stores in the US and Puerto Rico.

The company is also expected to add retail channels for PC sales in India, China, Australia and Japan. A new report by research and advisory firm Gartner states that the success of Dell's indirect marketing initiative in India may prompt the company to adopt the strategy in other emerging markets.

The move (on which Dell India says it has nothing specific to share at this point) will enable the company to increase its reach beyond major cities and allow it to carve a niche in India's burgeoning IT market. 

GROWTH DRIVEN
The top five brands in the first half of 2007
DESK PCs			MOBILE PCs
Shipments	Growth (%)		Shipments	Growth (%)
3,68,674	3.2	HP	2,83,245	94
3,39,200	-2.8	HCL	-	-
1,81,050	25.4	Lenovo	1,18,200	60
1,24,496	36.0	Acer	46,584	1.8
1,13,900	11.2	Dell	52,350	46
-	-	Toshiba	51,339	47
Source: Gartner

This makes sense, states the report, because it has long been evident that Dell's growth in the emerging markets had hit a plateau. India, in particular, has not been responsive to the direct approach because of different cultural and business practices.

Diptarup Chakraborti, principal analyst, global IT research and advisory firm Gartner, told Business Standard: "India is one market where the company has been doing well, but beyond a point you cannot do much through direct marketing. They have to start penetrating deeper into other segments. Besides, India is the only market where sequentially (quarter-on-quarter), the company has been in the fourth or fifth position. But in most other markets, they are within the top three players. Besides, the gap between Dell and the other players is huge in India." (see box)

Several factors have inhibited Dell India's growth. Dell in India is a $500-million entity with enterprise sector largely contributing to the revenues. The consumer segment, however, remains largely out of the reach of the company.

One of the reasons is the poor internet penetration in the country, thus making online ordering difficult. Besides, competitors, unlike Dell, sell at retail outlets in more than 200 cities, offering customers the chance to experience and use the products prior to purchasing.

Gartner expects that the expansion of Dell's partner base will enable the company to make headway in this area.

The company has already roped in experienced professionals to strengthen its indirect marketing initiative. Krishna Kumar from HP has joined Dell's marketing team, while Pallab Talukdar has been appointed as director enterprise business.

The company is likely to roll out the plan for its channel strategy in a phased manner, starting with large metropolitan areas followed by smaller cities.