Wednesday, January 28, 2009

Dell Computer Corp.: Failure in B2B E-Commerce Strategy

Dell Computer Corporation is one of the largest firms consisting of approximately 30,000 employees. They are located throughout the United States, containing high top quality supplies and security services. In order for a large company like Dell to grow with all the competitors in the industry, the organization must be willing to take chances, to expand the corporation. However, the risk a company chooses to take can either be detrimental or beneficial (

Dell’s success over the years has caused concern for the future of the young company. Dell’s business-to-business (B2B) exchange failed for a number of reasons. The primary reason is the lack of insight in the research and development area. A lack of knowledge in this area proved to be detrimental because the company was unprepared for the lack of cooperation that other businesses showed in this new idea. “Some observers reckon that Dell’s strong name and recognition may have worked against it, causing the company to be viewed as purely a computer manufacturer rather than a site also for alternative business products” (Opinion Wire. 8 February 2001.

Even though the business-to-business sounded like a great new opportunity, Dell jumped too quickly at the new idea. The computer industry is extremely competitive with several B2B exchanges taking place on the Web; only the strongest will survive. Dell and Ariba Inc. set up a B2B Marketplace hoping to allow online consumer sales to flourish. The suppliers include 3M, Motorola, and Pitney Bowes (O’Brien, p.77). This electronic marketplace would serve as a new way to easily obtain high quality products and have them readily available for sale. Their opportunist attitude towards company strategies left them with an unsuccessful venture. In turn Dell would not be the top choice for consumers. Therefore, in early January 2001, “A Dell representative said the computer maker closed the B2B exchange because of a lack of demand and unwillingness of customers to participate” (

Beginning the business in October 2000 and ending in January 2001 gave them only a short time frame to produce a profit. We feel that Dell gave up too early in the game because their expected profits were not met. If the business allowed more time to prove itself, it might have been able to salvage some of its profits. “It is predicted that B2B electronic trade will grow to be worth trillions of dollars over the next few years” (Opinion Wire. 8 February 2001, They should have focused on showing consumers that they are not just a PC firm. One way to do this would be to advertise the B2B and demonstrate their reliability and value of their computers. This would target their faithful customers, aiming to enhance the loyalty in the Dell brand name.

Another downfall may have been due to Dell’s choice of suppliers. 3M, Motorola, and Pitney Bowes are second-rate firms compared to companies such as Compaq, Hewlett-Packard and Gateway. Last May, these three firms joined forces and formed an Internet-based exchange. “These companies had an advantage over Dell because they had a broader array of established business partners and offered a wider variety of IT products” (

Choosing the best-fit match in the business world may have been difficult. Maybe if Dell incorporated smaller companies, they would have had more support and the potential for a larger growth. On the other hand, if they were to select a well-known firm, closely related to the computer industry, it could have provided consumers with a high degree of reassurance. For example, combining with Canon or Epson may have been a better B2B E-commerce strategy. These companies are closely related and can all be used with a Dell computer. We believe Dell’s best strategy would be to revaluate their suppliers. Thus we propose that Dell team up with Canon and Epson to insure and provide top quality computer/IT products.

Dell was “caught up in the hype” (O’Brien, p. 77). There is no such thing as “easy money” and with all the competition within the computer industry Dell should have thoroughly researched the positive and negative effects the corporation could receive. The B2B exchange is an opportunity for the future of the company, yet it needs to reinvest in research and development before it continues with this idea. Since other companies have been successful in this type of business, it is proven that this is a profitable business if the time and energy is invested properly. However, Dell recklessly jumped into this market and as a result failed after four months. They were not able to obtain the profits they originally predicted. Luckily Dell is a strong company and was able to survive after the loss. With the future of the B2B commerce looking very bright, it would be a good idea for Dell to continue on this project with an optimistic outlook.

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