Over the past few years there’s been tremendous churn among college stores and their partners as they try to satisfy the needs of students and parents seeking affordable course materials. As the traditional market for textbooks has faltered, many college stores have dropped book from their names. And some have stopped selling textbooks altogether.
Some schools—such as American University in Washington, D.C.; the seven-campus City Colleges of Chicago; and Stony Brook University in Stony Brook, N.Y.—have moved the sale and rental of physical and digital textbooks online to third-party vendors. Many others, using a hybrid model, continue to have campus stores. But those that sell books tend to stock bestsellers and adult coloring books. The bulk of their inventory is comprised of logo merchandise, spirit wear, and other nonbook items, including grab-and-go food.
According to Jonathan Shar, chief marketing officer for Akademos, which works with colleges to provide a virtual bookstore and marketplace where students can get their textbooks, the pace of the transition to digital platforms has begun accelerating. “In the last 18 months, we’ve launched more virtual bookstores than in the entire history of the company,” he said. Barnes & Noble Education, which operates 770 campus stores, made a big shift in March when it purchased the assets of digital educational platform LoudCloud Systems to better position itself in the digital products and services market. Following the acquisition, B&NE shut its own digital platform, Yuzu.
But having a strong platform doesn’t always ensure long-term success. In October, Rafter—which evolved out of the country’s first college-textbook-rental startup, BookRenter, and raised $85 million in venture capital—closed. One week after announcing its partnership with Avila University to provide course materials, Rafter posted a notice that is was closing.
Other companies that began by offering textbook rental have expanded and modified their models. Chegg, which is now processing rentals for BookRenter.com, has branched out to provide direct-to-student services, such as study techniques and test prep, through its platform. In reporting its financial results for the third quarter of fiscal year 2016 ended Sept. 30, 2016, CEO Dan Rosensweig said that textbooks remain “a significant pain point” for students. Not so much for Chegg, which partnered with Ingram two years ago so that it could free up capital and stop stocking physical books by the end of this year.
Sidewalk, which launched as a rental alternative, CampusBookRentals, continues to find value in rental, but by working with campus stores to assist them in their programs. “What we did is rent a lot of [physical] textbooks, and we still do,” founder and CEO Alan Martin said. “Our thesis hasn’t changed. We are super focused on cost.” Citing a recent report that 50% of students select their courses based on cost, Martin said, “It’s just failure if you have half of your audience avoiding you. That’s the thing that needs to be fixed.”
Martin views faculty and the way they choose course materials as a major hurdle in getting students affordable course materials. Two years ago Sidewalk purchased Hero software from Brigham Young University and licensed it back to the school. What attracted the company to Hero was that it gives faculty more choice and transparency when choosing course materials, so that they know the cost of each adoption. Faculty can even use Hero to negotiate the cost of digital content. Hero also links with a university’s campus store and with its students. “Our mission is to aggregate the largest number of faculty on a platform,” Martin said, adding that Sidewalk is about to add its 100th university on the platform.
Despite the advances made in lowering costs thanks to rentals and digital content, a U.S. PIRG Education Fund survey released in 2014 found that 65% of students opted not to buy a textbook because of price and that 94% worried that their grade would suffer as a result. A report by the National Association of College Stores’ OnCampus found that the average spending on course material was $602 for the 2015–2016 season, slightly up from the previous year, but down from a high of $701 in 2007–2008.
Greg Fenton, cofounder and CEO of RedShelf, a startup working to get digital material adopted on college campuses, wants publishers to transition away from their current model of trying to make 60% or 70% of their revenues when a book first comes out. “Everybody knows the $300 textbook is not going to be successful,” Fenton said. “If everything converts to digital, we can make the student experience better and less expensive.”
Some publishers have begun listening to Fenton’s message. Over the past 12–18 months RedShelf has increased its title base to over 370,000 titles, and it expects to have a half-million titles next year. At this year’s Frankfurt Book Fair, “all publishers wanted to talk about was, ‘how do we get rid of used books and go digital?’ ” Fenton said. “I think it’s a snowball effect.”
Amazon has been among the biggest disrupters. It now owns 23% of the college-textbook market according to data from NACS. And ever since it first tested working with a college store, launching a partnership with the UC Davis Bookstore in November 2013, the e-tailer has become an increasingly visible presence on campus. Although not the official textbook vendor at UC Davis, Amazon is the official vendor at a number of schools including Purdue, where it opened its first campus pickup location in February 2015. By the end of 2016, Amazon will have 18 pickup locations in 17 college communities.
With textbook sales no longer a profit center, many colleges and universities are choosing to lease out the operation of their stores, if not to Amazon, then to B&NE or Follett, which operates 1,200 stores. Last year Follett purchased 200 on-campus and off-campus retail stores and their assets and inventories from Nebraska Book Company when it exited the business. In April, the University of Connecticut replaced the 40-year-old UConn Co-op and named B&NE its official college-store operator. That same month the University of North Carolina signed a 10-year, $30 million contract with B&NE.
“Our research shows that 80% of students still prefer to purchase or pick up their books in-store,” said Patrick Maloney, president of B&N College, who views campus stores as campus hubs. “The role of today’s campus store is to be much more than a place for students to get their textbooks or apparel. It’s about rising above the retail transaction both in-store and online by creating an experience that truly supports students, empowering them to make deeper connections with their school, friends, and professors, and ultimately [to] succeed academically.”
Maloney’s view is not too far off from that of NACS CEO Robert Walton, who assumed the post last summer. Walton’s concern is that there has been too much focus on retail and textbook sales, which only occur at most schools eight weeks a year. In addition to selling things, campus stores support faculty, host alumni visits, and play a vital part in branding. Independent stores, unlike lease operations, keep profits on campus.
Despite NACS’s launch of its IndiCo subsidiary in 2013 to help independent stores survive, 85 indie campus outlets are replaced by leased stores each year. To stem the flow, NACS is planning to introduce new services for member stores at Camex (Campus Market Expo), set to take place in Salt Lake City in March. As part of the program, Walton is working on partnerships with a dozen platforms, including RedShelf, Sidewalk, and Verba Software (which allows stores to share the prices at other retailers with students). And he’s even in talks with Amazon. “We need to change our business model,” Walton said. “Otherwise there won’t be any independent stores in 10 years.”
Correction: An earlier version of this story stated that Amazon has 35% marketshare of the textbook. The correct percentage is 23%.