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Q: ROI on Computers ( Answered 5 out of 5 stars,   0 Comments )
Question  
Subject: ROI on Computers
Category: Business and Money > Advertising and Marketing
Asked by: bdw0617-ga
List Price: $23.00
Posted: 09 Aug 2002 23:18 PDT
Expires: 08 Sep 2002 23:18 PDT
Question ID: 52885
What is a good ROI for selling computers? If I ran a good site selling
computers on overture and I recieved 100 clicks in 1 hour, and they
were all well targeted, what would a good percentage be for them
actully buying my product? Also, how many computers does Alienware,
Dell and Gateway sell a day(online)?
Answer  
Subject: Re: ROI on Computers
Answered By: morris-ga on 11 Aug 2002 09:06 PDT
Rated:5 out of 5 stars
 
bdw0617-ga, 

The full year 2002 figures aren't available yet, but in 2001
(according to IDC), Dell sold 10.82 million units (29644/day) and
Gateway sold 3.22 million units (8822/day).

http://lamswww.epfl.ch/Teaching/Course/Marketing/PDFSTSCourse2002/PCsize.pdf

The sales numbers for Alienware are not publicly available as they are
a private company, but according to the International Herald Tribune,
Alienware PCs have an average selling price around $3000, and they did
28 million in business last year, so they are selling about 26/day.
According to the same IHC article, their sales are expected to climb
to $50M this year, almost double.

http://www.iht.com/articles/62450.html

There's a great article on the CNet site on the subject of specialty
PC builders, which includes Alienware, as well as Voodoo, Hypersonic
PC, Falcon Northwest. I'm mentioning it because they feature Voodoo,
which only sells about 400 units a month (around 13/day), so you can
compare the Alienware numbers "Apples to Apples".
 
http://news.com.com/2100-1040-867534.html?legacy=cnet&tag=lh

Actual sell-through (conversion) rates are in the single digits. My
own conversion rates on high quality click-through as an Amazon
Associate run in the 3% range. According to the annual Shop.org
survey, conversion rates have improved from 2.2 percent in 2000 and
1.8 percent in 1999 to 3.1 percent in 2001. These numbers are for all
goods sold online, including computer hardware.

http://retailindustry.about.com/library/weekly/02/aa020612a.htm

The ROI part of your question depends entirely on how you set up your
business and what margins you sell at. Dell is the acknowledged leader
at the margin game in mass market PCs and servers, achieving 7.2% net
margin on sales. Your margins should be higher if you are entering the
specialty game PC market, but since those companies are private, they
don't have to report their margins (and they don't).

http://www.dell.com/us/en/gen/corporate/press/pressoffice_us_2002-02-14-aus-000.htm

According to "Buying and Selling Computer Parts" the general rule in
the PC business is that you have to sell at a minimum gross margin of
15 points in a computer business without a retail storefront. To
compute a 15 point margin, just divide your cost by 0.85.

http://www.fonerbooks.com/buying.htm

For more information about running a computer business, you might also
join the computer business group at Yahoo

http://www.groups.yahoo.com/group/computerbusiness

Putting it all together, if you were really getting 100 high quality
clicks per hour with a sell through rate of 2%, you'd be selling 2
computer an hour or 48/day. If you're in Alienware's market, selling
$3000 PCs, your gross sales would be $144K/day or about $52M/year. At
a 15 point margin, you'd have a net profit of around $7M. However, you
need a ton of cash or credit to finance $144K in sales every day, and
I suspect you're real conversion rate for high end PCs would be well
under 2%. Consider that Alienware has been in business for years and
they only sold around 26 computers a day last year! If we reduced the
active window for sales to 12 hours a day, that would halve the
number, but it still strike me as a bit high.

I hope you find this information useful.

Google Search terms used
dell dateway annual sales
alienware "pc sold"
conversion sell-through rate
bdw0617-ga rated this answer:5 out of 5 stars
All the Info and more that we were looking for.

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