Govt's retail policy dampening Dell's direct model

Though Dell is recognized as one of the largest sold brands globally, its recall in India leaves is not as good. And the company feels it is the Indian government's decision not to allow Foreign Direct Investment (FDI) in retail, which is responsible for the same. 

The IT major follows a 'direct model' of selling its IT products rather than going via the usual distribution model followed by other PC makers like HP or IBM. This model calls for direct orders to be placed over the net. 

“The situation is like this - within India no one can order for our products 'online' because any online transaction would be considered as retail and FDI is not allowed in retail. So if Indian customers want to buy from us, they need to do so by logging onto our US website and placing the orders there with the help of credit cards — that way they would need to 'custom — clear' the product themselves. It is a cumbersome process and that's why we are not that visible in the low-end segments,” explained Romi Malhotra, MD, Dell International Services.

In most markets across the globe - US, UK, France, Germany or Japan - Dell outsells many rivals, both local and foreign. However, India presents a different picture altogether. The world's largest computer seller is way behind other MNC brands in India where PC sale is exploding, and the market opportunity is immense. 

“We know that there is huge potential in the Indian market but we have a strategy to market our products using the well-evolved 'direct model' and we will continue to do that. At the same time, we would the government to do something on this front. There is no doubt that our sales in India will increase if we can sell online our Indian website,” Romi added. So far, Dell is focusing its efforts on the enterprise segment in India and has dedicated sales teams working closely with its set of enterprise customers in India.

Dell, though present in India for a fairly long time, has much lesser market share when compared to most other competitors. Dell is among the top 5 PC vendors in the country; according to IT market research company IDC. In 2004, for instance, Dell's Indian market share was a meager 3.2%. 

This is primarily because the company sells only through the Internet, with the help of a model for ordering through the Web, a practice that Dell has mastered and encourages clients to move to, world wide. The government's stand on FDI in retail segment has made sure that Dell does not achieve much of a growth in the domestic market. 

PC industry analysts opine that even though Dell is good on the pricing front and the company has indeed made inroads into the commercial market, it has not achieved much when it comes to the burgeoning small and medium businesses and home sector. 

This could change, if and when the government opens up its policies on the FDI for retail segment. Moreover, an already increased usage of Internet in the country would then make sure that Dell has enough orders on hand even from small cities. 

ZIA ASKARI

NEW DELHI