
Gateway started its business by using the direct sales model, which enticed customers to buy computers, laptops and other peripherals directly from the company without having to deal with markups when buying from retail locations. Gateway expanded its business model to soon include Gateway retail stores, which stuck to the direct sales model, but put Gateway in control of offering their products directly to customers in the retail setting. Well, the Gateway retail stores soon closed and now it looks like Gateway will be moving away from the direct sales business model altogether.
According to the company’s press release, Gateway moved to a 100% indirect sales model effective on Sunday. The company stated that any orders already received through the website and phone number will still be processed, but no further orders will be taken. Those with a Gateway gift card will still be able to redeem their card for its full value and can simply call 800-369-1409 for more information. The company will also still honor any saved quotes for a period of 30 days.
Gateway will now offer its products through retailers including Best Buy, Circuit City, CompUSA, Costco, HSN, Newegg, Tiger Direct, Office Depot, OfficeMax and Wal-Mart, in addition to others.
The move comes as a result of Gateway’s acquisition by Acer back in August of last year. Gateway’s press release stated that the shift in Gateway’s distribution method was done, “to better align with Acer’s successful global strategy, which was built upon an indirect model.”
Read more from the Gateway press release and website.
Brian’s Opinion
I can’t say this is a huge surprise considering the Acer acquisition and the fact that many companies are now moving away from the direct sales model. One good example of this is Dell. Dell is beginning to transition to a retail distribution model. Honestly, I won’t be surprised that once Dell sees some good retail numbers that they get rid of the direct sales model altogether as well.
Unlike Gateway, it’s going to be a little harder for Dell to go 100% indirect. After all, the direct sales model for Dell is practically a religion at the company. When it comes to changing religion it’s not a quick process so naturally Michael Dell is treading lightly. One could say it wasn’t a quick process for Gateway either since it took some time for them to make the switch after being acquired by Acer.
The worst thing a company can do is to alienate its customers. Clearly, Gateway thought the time was right based on increasing retail numbers and decreasing direct sales. I would imagine Dell will follow suit when they see a similar shift in their customer base.