As of last week, Dell announced that it is going to cut back on mail-in rebates and make sale prices much more accessible to customers following complaints that the procedure for receiving the sale price was too complicated.
Analysts believe this will help increase Dell’s customer relations but not necessarily its sales. Dell, the world’s largest individual computer maker stated that item prices will remain the same.
Dell M6500. Dell Cuts Back On Mail-In Rebates. 360Dell’s sales have been down in recent quarters with tougher competition from their number 1 competitor Hewlett-Packard. Dell which sells directly to shoppers via the internet and via phone has had complaints of their poor after-sale performance. In the early 90’s Dell’s percentage growth was much higher and analysts wonder if Dell can once once again reach these numbers.
An analyst with Cross Research says, "Dell is facing a great deal of challenges. HP is just reinvigorated, which is 1 of their greatest challenges. Their competitor is back."
Dell shares ended down 68 cents, or three percent, at $21.70, much more than the Merrill Lynch Tech 100 index's (^MLO - news) 1.6 percent fall.
Dell M6500. Save hundreds on your next Dell obtain - Astounding secrets revealed. 439 Dell anticipated a reduction of approximately 70 percent per item line inside the number of promotions for U.S. buyers and small companies. Promotions connected to a single item line would decline by 80 percent.
Reductions will take impact in the next 12 to 18 months, beginning with the Inspiron notebook computers and Dell monitors.
Moors and Cabot analyst Cindy Shaw stated, “People hate rebates” and she believes this is usually a positive move for Dell.
Some analysts thought Dell would introduce cost cuts to contend with competitors Hewlett-Packard and Acer Inc. They continue to diminish Dell’s long-established price advantage thanks to less expensive components and a lot more competent manufacturing.
In May possibly, Dell publicized its plans to lower prices and is spending $100 million to improve customer service by hiring over 2,000 sales and support staff.
Dell’s senior vice president of property and small business groups, Ro Parra said the cutback in promotions will not affect the “net price” that clients pay but make the method of buying a laptop or computer less difficult.
Parra commented to reporters that clients don’t like rebates and only about 80 percent redeem them. He also stated "They are problematic, and our intent is to decrease them over time."
Dell M6500Dell also as other retailers like Ideal Purchase Co are cutting back mail-in rebates. They are not much of an incentive to shoppers since they have to fill out forms, send item codes and then wait numerous months to receive a check.
Dell’s new focus on existing promotions will likely be paperless rebates which make analysts wonder if this will motivate consumers to make the most of the offers.
Study analyst Cross said "My greatest question is, what the monetary impact of this is? If you don't get loads of hits on mail-in rebates, and now you are just going to go to instant rebates or cost cuts, then that hits every person."
