December 2, 2003, 12:00 AM

Computers / Electronics / CDs / Videos:Building on a market made for the web

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Sometimes a web site can ride its forte too far. Take Dell Inc., whose philosophy and business model are built on a direct-to-customer strategy. As the standard-setter in selling computers direct to end-users over the Internet as well as through catalogs, it has leaped to the forefront over the past several years as the leader in its market.

But as well as its model has worked, it wasn’t good enough to serve a company with an expanding array of customer segments and geographic markets, says Manish Mehta, director of global e-business. “We had mixed success in terms of user experience. Our focus was a little imbalanced toward technology infrastructure.”

While Dell led the way with product configurators that let shoppers build desktops and laptops by choosing their own mix of power settings and accessories, it offered an overall site experience that didn’t support shopping across multiple categories ranging from consumer desktops and laptops to industrial servers. And with its recent thrust into digital entertainment, it figured it was time to completely redesign its site to support a multi-category shopping experience.

“Dell’s consumer electronics strategy is well-suited to drive incremental sales and order sizes,” says Joe Beaulieu, analyst with investment research firm Morningstar Inc. “There hasn’t been a compelling reason to upgrade to new PCs lately, so the move to digital entertainment should be a way to get people to upgrade with more megahertz and RAM.”

Dell launched a redesigned web site this fall that makes it easier for customers to navigate among different product segments, so that a business owner can research and purchase servers and storage systems, for example, then click to a section for viewing personal or business desktop systems, Mehta says. After researching how customers preferred to use its site, it provided order status links on every page and added more merchandising space by removing a rarely used left navigation bar in favor of a top horizontal bar.

“We now provide greater continuity throughout the site, so it’s easier to navigate and understand,” Mehta says. “The site redesign puts us back in balance with customer shopping needs.”

And keeping balance is crucial for Dell’s strategy of migrating customers toward a wider offering of consumer products, as Dell seeks to make its PCs the center of home digital entertainment systems. The centerpiece of its new push in entertainment is a new multi-function computer monitor that will also serve as a television screen for displaying videos. “This is at the heart of our strategy of turning the PC into the digital hub of home entertainment,” founder and CEO Michael Dell says.

Dell.com
Date
1996
Unique Visitors (monthly)
15,000,000
Sales (U.S. annual)
$2,800,000,000
Site Design
Critical Mass
CRM
in-house
Affiliate Management
LinkShare
Fulfillment
Kewill/in-house
Order Management
in-house
Web Analytics
in-house
Payment Processor
Certegy
E-Mail Management
PeopleSoft
Site Search
FAST

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GoodGuys.com
Keeping it simple--and profitable

Walt Mulvey, CEO of GoodGuys.com Inc., makes no pretentions about GoodGuys.com being a flashy place to shop for consumer electronics. He prefers to keep things simple - and profitable, he says.

“Our site is not the prettiest site, but we help customers find products in a hurry, and when customers get to one of our product pages, we make it easy for them to find other products and accessories from the same page,” he says. “I’m not sure what came first, keeping things simple or profitability. By keeping things simple, we’ve been profitable, but because our first requirement is to be profitable, we’ve had to keep it simple.”

Simplicity doesn’t mean lack of shopping options in its niche of electronic entertainment, however. GoodGuys.com sells more than 50 brands, and it serves them up through a variety of ways to shop. And it offers free shipping on everything. “They’re highly focused on entertainment electronics, and their assortment of brands is really appealing,” says Kelly Mooney, president of retail consulting firm Ten/Resource. “That definitely makes them a draw for some people.”

Among GoodGuys’ fortes, she adds, are several shopping options and customer service features not often found on other sites. One is a clearance area that offers products at up to 40% off but with full warranties; another is the ability to download rebate forms. It also offers extended warranties at 20% discounts. “They offer a number of things that serve as incentives for customers to get engaged,” Mooney says.

So how can GoodGuys.com, which is a separate entity from the Good Guys retail chain, afford such pricing and service and still produce profits? One way, Mulvey says, is that it doesn’t hold its own inventory in warehouses, relying instead on drop shipments from suppliers and products it acquires from the Good Guys retail chain. It also relies entirely on in-house development of site applications.

“We’re lean and mean,” Mulvey says. “We’ve built an infrastructure and developed tools that allow us to check profitability.”

For example, he adds, GoodGuys has arranged its product databases to let it quickly change the way its site’s searchable words relate to its product descriptions. “If we see someone searching on a word that we haven’t linked to the product they eventually find, we’ll link it right away,” Mulvey says.

His development team has also arranged the site so that products in any SKU are never more than three clicks away. “Our look-to-buy ratio is very high,” Mulvey says.

GoodGuys.com
Date
2000
Unique Visitors (monthly)
186,000*
Site Design
in-house
CRM
in-house
Affiliate Management
Be Free
Fulfillment
in-house
Order Management
in-house
Web Analytics
in-house
Payment Processor
Certegy
Content Management
in-house
E-Mail Management
in-house
Site Search
in-house
Search Engine Management
in-house
*As reported by comScore Networks Inc.

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