Dell claims online sales boom

The Austin, Texas-based company, which started selling computer products over the Internet one and a half years ago, made the disclosure in conjunction with the release of its fourth-quarter earnings. In December, Dell said its Web site was registering about $3 million in daily sales. But the success of Dell's cyber story is taking an unexpected twist.

Consumers and small business buyers account for about half of the company's burgeoning Web business. By comparison, Dell derives about 90 percent of revenues from sales to medium and big businesses.

"What's absolutely true is that it's been disproportionate," said T.R. Reid, the company's director of corporate communications. At the same time, Reid said the company was not backing away from a projection offered by the company's CEO, Michael Dell, last autumn when he said Dell could derive about half its revenues off the Web by the turn of the century.

"It's not so much a projection but a goal," he said. "Michael said he expected we'd get there within the next couple of years. That would make it something like 50 percent of all our transactions online. Perhaps we'll exceed that as large corporate customers increasingly come to recognize the benefit of buying online."

Still, analysts caution that at this stage, most of the company's Web revenues come from customers who would have otherwise ordered products by phone or by placing orders with Dell's outbound sales force.

"I would suspect it's that," said Charles Smulders, an analyst with Dataquest. "It's not incremental revenue." Even so, he said Dell could realise tangible cost savings as a larger percentage of its business comes from online sales. "If they can get a large percentage of their customer base to buy off the Web, it could be a very significant cost saving because the Internet [model] is very efficient," he said.

Reid was unable to exactly gauge the magnitude of dollars-and-cents savings realized by Dell because of the growth in the company's online sales. However, he said there are some general ways to quantify the figure, noting that it costs Dell $5 each time it mails out a product catalog.

"If someone's first gone to the Web, you have a savings there. And even people who call up to buy usually require fewer telephone calls if they've been to the Net first," he said.