An example of an E-Commerce Failure and its Causes~

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

Dell Computer Corporation is one of the largest firms consisting of approximately 30,000 employees with high top quality supplies and security services in United Stated. 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. One of the strategies is business-to-business (B2B) exchange. However the strategy was failed.

Dell’s business-to-business (B2B) exchange failed for a number of reasons. The main reason is lack of knowledge for development and research. Without the existing knowledge in this area shows the higher risks as the company was unprepared for the lack of cooperation with other businesses showed in this new idea. “Some observers think 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. www.serverworldmagazine.com).

Dell and Ariba Inc. set up a B2B Marketplace hoping to allow online consumer sales to flourish. B2B Marketplace sounded is a great opportunity but Dell jumped it idea too quickly. Computer industry is full of competitive with several B2B exchanges taking place on the Web, just the only stronger will survive. This electronic marketplace is 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. However Dell would not be the top choice for consumer. Dell closed the B2B exchange because of a lack of demand and unwillingness of customers to participate (www.zdnet.co.uk).

The third reason is Dell gave up too early in the game because their expected profits were not met and they just have a short time frame. If the business allowed more time to prove itself, it might have been able to recover 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, www.serverworldmagazine.com). They should have focused on showing consumers that they are not just a PC firm as advertise the B2B and demonstrate their reliability and value of their computers is a way for company target their faithful customers, aiming to enhance the loyalty in the Dell brand name.

Another reason 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. These three firms joined forces and formed an Internet-based exchange. This makes these companies had an advantage over Dell because they had a broader range of established business partners and offered a wider variety of IT product. (www.zdnet.co.uk).

Choosing the best-fit match in the business world may have been difficult. If Dell incorporated smaller companies, they would have had more support and the potential for a larger growth. In other words, 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.

Dell was ‘caught up in the hype’. “Easy money” does not exist and with 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. But, Dell recklessly jumped into this market and faced failure. They were not able to obtain the predicted profits. Since 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.