Direct Sales Model may not be enough anymore

by Deepak Sharma on Sunday, May 27, 2007

Dell has plans to start selling Personal Computers at 3500 Wal-Mart stores across US and Canada. While this could be first such initative with the company, looks like Dell has a strategy to partner with other big retailers also like Circuit City, Best Buy etc. Why is Dell doing this? Apparently direct sales model via the Internet, mail or phone orders is not working enough. Dell was missing out on consumers who make atleast once a week trip to Wal-Mart and can see an actual computer in working and if decided buy it right away from the store and not keep waiting for it to ship as is the case with Internet purchases. This will surely impact Dell's margins as selling via a retailer will always be less (some part will go to Wal-Mart). Also, Wal-Mart is known to place extraordinary pricing demands on its partners. It will be interesting to see how Dell copes up with that. This partnership plays well with Wal-Mart's plan to expand its selection of electronic products.