According to CNN’S FortuneTech, before Dell Computers’ success, India’s computer market was ruled by Hewlett-Packard and Chinese computer maker Lenovo. HP arrived in 1989 when its only competition was IBM. Both HP and Lenovo had factories in India, and their products were available off the shelf through a vast retail network. Because the companies supplied machines whether there was demand or not, customers were offered hefty discounts, which made sales rise.
Today, Dell has sold over 1.1 million desktops, laptops and notebook computers in India in 2010, compared to HP’s 1 million and Lenovo’s 600,000. India is emerging as the fastest-growing market for the company, reporting a year-on-year growth of 55%-the highest for any Dell market.
How Dell did it
They first set up a factory in India. According to M.R. Sundaresan, general manager of operations for Dell India, Manufacturing locally cut delivery time by almost 50% and improved profitability.
They also changed the way they sold computers. They set up exclusive outlets across the country and hired a battery of sales affiliates, who were given incentives to sell. The company also made virtually no investment in warehousing and delivering products right to customers’ doors upon demand.
Adopting the insurance agent model
Dell divided the Indian market between 35 master sales affiliates. It sidestepped the established national, regional, and retail distribution model to instead follow a model typically used for insurance agents. Thousands of registered individual sales affiliates reach out to retail customers in person and give them a first-hand product experience at their doorstep.
Dell simultaneously opened 38 exclusive stores across India, for a shop-in-a-shop counter for its products. They further backed this retail model by extending onsite service by having technicians coming to individuals’ homes in 650 cities to retail and small business customers as well. This gave access to even rural areas, where customers would not have easily had access to their products.
Dell is betting on opportunities due to increased data access and demand for solutions around mobility, virtualization, and cloud computing. It has diversified into areas such as smartphones, tablets, and printers. For Dell, India has emerged as a local and global service delivery hub. It is the only market outside the U.S. with all business functions-customer care, financial services, manufacturing, R&D, and analytical services-operational at the local level and giving global support. “We evaluated market trends and growth potential, enabling us to invest ahead of the curve in India, resulting in our phenomenal growth,” says Midha.
