The following a guest post by my very good friend Lucio Ribeiro, founder of The Online Circle, Marketing Easy and Internet Marketing Academy. If you like what you read you can also follow him on Twitter.
Dell has always been known for its innovative distribution. Since being founded, their web based direct selling model has been one of their major competitive differentials. Most of you will still remember the Dell Dude back in 2000. This advertising campaign popularised the phrase “Dude, you’re getting a Dell.” The commercials would usually feature an actor ( Ben Curtis – aka Dell dude) informing prospective buyers of all the perks of owning a Dell. When the party was sold on the idea he would close with the catchphrase “Dude, you’re getting a Dell”. The campaign was a huge success and not only helped bring prominence to Dell, but to Curtis as well.
To circumvent an eroding distribution advantage, Dell is once more innovating within its sales process. And this time they’ve found a solution in social media. Dell Swarm is the new service launched by the company in Singapore, which allows customers to shop online in cooperative style.
It works like this:
You go and select your product. Being the first buyer to join a “Swarm” Dell promises to give a price lower than their best discounted price.
After selecting your product you set up a community. For every new buyer that joins the swarm, Dell drops the price a touch further up until 15 users have joined (or 72 hours have passed).
Ultimately, everybody gets a very significant discount. To achieve the maximum discount, buyers are to use social networks like Twitter, Facebook, Linkedin, vertical forums and Social Sharing tools to find new partners. The more people who sign up, the cheaper the product gets until it reaches a pre-determined lowest price.
The service aims to attract students and buyers sensitive to price. It is a very interesting scenario, although not necessarily a real business innovation. Many companies have organised similar buying dynamics for years. Wholesales companies, for example, have been banding together to buy from manufacturers at lower prices.
Small retailers, who come together to achieve better terms in negotiations, also indicate that “social strategies” have existed for a long time. There are countless examples.
However what changes is the fact that with the emergence of social media, the “social thinking” is more easily spread among the common people. Tools that facilitate widespread connections have emerged, breaking down restrictions relating to geographical barriers.
Consequently, consumers gain negotiation power and increase their bargaining muscle. Companies that understand this (and the Dell seems to have done) may see great opportunities ahead.
Apparently, the project has started well for Dell, with the term Dell Swarm generating some buzz on Twitter. It will be very interesting to follow the results and watch for expansion to other countries.
What’s your opinion? Can Dell Swarm work?
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Interesting concept Lucio. I tend to agree it’s not necessarily a new way of selling, but rather an expansion of existing sales processes to your everyday Joe (enabled by social tools). I’ll be interested to see how it goes. I can’t see any reason why it wouldn’t work. Power to the people. Let’s just hope people don’t abuse it. I wouldn’t want to see invitations regularly appearing in my Tweets. Sounds a little Facebook Beacon-ish to me.
Hi James,
Thanks for being courageous and publish my post.
Yes it’s nothing new conceptually, but new on the way of implement.
I’m particularly interested to know what products will be available. There are two extremes here. Most of the target market (I’m assuming) is pretty much websavy, they tend to go for top shelf products rather than cheap-low ticket products. Will Dell really support a decent discount worth of sharing?
As far i understood Dell will pick the product to be offered rather than allowing users to decide details.
Let’s see if takes off.
Lucio
Nice one guys. The real beauty I see here is that if people are buying a Dell anyway, they might think “I may as well throw it out there and see if anyone else might be thinking about buying one”. They then tell all their Facebook, Twitter friends that they are buying a Dell and if they are thinking about it as well it might be a good opportunity to get the price down. It gives the consumers a reason to tell the world about their purchase.
Interesting concept. Kinda sounds like a reverse pyramid scheme in a way!
Of course, the downside is, you have to buy a Dell…
its that whole WOM mentality. i like it – getting the consumers to market to their friends.