Saturday, January 31, 2009

An Example of An E-Commerce Failure and Its Causes

One of an example of an e-commerce failure is Dell of its Business-to-Business(B2B) strategies .

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”

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. 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”. Dell gave up too early in the game because their expected profits were not met. 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. 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 instead of Motorola which is less expertise.

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.

No comments:

Post a Comment