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2.2.2 Directs Sales

The direct model refers to the fact that Dell does not use the retails channel, but sells

its PCs directly to customers through its website, Dell.com, as Figure 4 shows. This

way the intermediary steps that may add time and cost are eliminated, and Dell is

directly linked to its customers.

Figure 4: Distribution channel of Dell vs. a traditional company [31]

In fact, Dell sells directly to all its customers, “from home-PC users to the world’s

largest corporations” [54]. This way it creates a direct relationship with each

individual customer, which turns out to be a great source of competitive advantage.

As Michael Dell has stated, this direct relationship “creates valuable information”

about the customer, thus Dell knows who the end users are, what they have bought

from Dell and what their preferences are, a fact that allows Dell to offer add-on

products and services, and stay, in general, closer to the customer [27]. As Lawton et

al [29] suggest, this “provides Dell with a wealth of marketing and product

development information”.

Dell distinguishes three rough customer segments: large organizations (large

companies or government institutions), small and medium businesses, and personal

consumers; the mix of customers served is wide (no customer represents more than

1-2% of Dell’s revenues) and there is a focus on large customers (70% of Dell’s sales

corresponds to them) [34]. It is also worth mentioning that segmentation is getting

11finer and finer in order to better approach the customers. This fact, in combination

with the direct model, leads to the ability to better forecast demand [34].

Especially in the case of large customers, the above-mentioned direct relationship is

upgraded to virtual integration. With the help of