Business Today Net Special

Compaq On-line

Paul Blinkhorn, Director (Commercial Personal Computer Group), Compaq Asia Pacific---the man responsible for Compaq's business in 12 countries in South Asia and South East Asia---was recently in India to launch the computer manufacturer's on-line buying facility, e-store. BT's Pooja Garg caught up with him to discuss the implications of e-store on Compaq's distribution channel in India.

BT: Please elaborate the idea behind e-store...

PB: Put simply, e-store will enable buying Compaq products from our website. We will also be able to build the product customised to the user-need in our Indian Configuration Centre, the manufacturing unit in Bangalore.

Is the e-store going to work in tandem with your channel partners, or are you looking at it as a separate distribution channel?

We are looking at e-store as another channel of distribution. We will be following direct fulfillment model there. We are all for giving choice to the customer.

Won't that give rise to channel conflict between channel partners and the company? Isn't Compaq competing with its partners in the same space?

Our idea is not to take business away from channel partners. Like I said, we are committed to giving choice to the customer. The customer is free to go to the value-added reseller. Also, e-commerce is growing very rapidly. By 2003, e-commerce is expected to grow to $1.3 trillion. So, we know that people do want to buy directly on the internet.

You have tried out this model elsewhere, haven't you?

Oh, yes. We have 53 e-stores across the world in 93 countries. We have eight locations across Asia Pacific, India being the eighth. Our e-stores are married to a call-centre, which will take care of service issues.

And has it worked?

It has worked very well. In August, we have transacted $ 7 million worth of business per day, on the internet.

Are you working towards an all-internet model, or are you looking at focussing on different segments through each delivery model?

The second. We are looking at SME, SOHO, and the consumer market through e-store, while our channel partners could focus on our corporate customers. We realise that the consumer market is eager to address the vendor directly. The final choice has been left to the customer to purchase from the end with the maximum value-addition.

And you are looking at providing customised offering to the consumer through the e-store?

That's right. We are looking at the Indian manufacturing unit to be able to provide that.

Are you looking at the manufacturing unit as a supply base for other countries as well?

We are evaluating that option. We are looking at supplying to South Asian territory through our Indian facility, which is extremely cost-effective to us.

What factors would you look at in evaluating this option?

One is of course, the regulation: what the import duties are and what would that mean to our plans here. The other is the cost: Indian facility is extremely cost-effective, like I said, compared to others in Singapore and Australia. Labour and overhead costs are lower here.

Compaq has lost share in the PC market. What are your plans there?

Yes, we did lose some share in this segment. But in the second quarter this year, we have returned the company to profitability. As to our plans, we have introduced a new range of innovative products in the area of internet access devices. We have also launched Desk Pro SB, a new range of PCs which is positioned at a lower price point. We hope this will do well in India. India is a highly price-sensitive market. We are looking at products produced locally and at the right price-points. Also, our internet access devices are capable of working with legacy systems. So, one doesn't need to replace an old system to derive benefits of new technology.

Are you looking at having R&D centre here in India?

We have one software development organisation here. However, we are open to partnering with Indian companies for solutions and services.

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