School Daze

Can Textbook E-Tailers Topple Bookselling’s Ivory Tower?

Like many Internet business ventures, online textbook retailing undoubtedly seemed like a good idea at the time. An obscenely plump $5 billion industry just begging to be undersold. More than 5 million full-time undergrads and 10 million other higher education students with annual discretionary spending power of a whomping $105 billion. An army of fresh-faced campus reps eager to trade stock options for a little hard-sell on the quad. Market opportunity? Get outta here. This was venture capital Valhalla.

Yet to the dismay of virtual financiers everywhere, storming the ivory tower has proven more costly and more impracticable than probably any Silicon Valley brain-trust could have predicted. reps were yanked off of the George Washington University campus when they set up a table in a university-owned shopping center. Amid charges of “unfair competition,” upstart Canadian e-tailer was likewise banned on campus. Sites such as have been forced to file Freedom of Information requests to access university course and title lists. Meanwhile, NACS slapped VarsityBooks with a federal lawsuit on grounds that the e-tailer doesn’t actually offer its advertised 40% discounts, and has threatened other online purveyors with same. To top it all off, after e-tailers poured millions of dollars into MTV ads — and with VarsityBooks announcing it had spent $20 million on marketing and sales in 1999 — web researchers reported that nearly a quarter of Internet users polled couldn’t recall a single dot-com ad they had seen on television.

“Frankly, we’re at a loss to understand why so much attention is being paid to it,” says Eric Weil, a managing partner of the market research firm Student Monitor. “Only 8% of all students tell us they’ve ever purchased a book from an online retailer. The impact has been rather minimal.” And that’s almost an understatement. The Wall Street Journal reported that despite collective investments that must reach into the hundreds of millions, only 1% of college textbooks are sold via the web. It seems clear from the outset that any victories won by e-tailers in the college textbook market will be Amazonian — that is to say pyrrhic — at best.

Dude, Buy This Book!

But thin profit margins, off-kilter sales cycles, mercenary competition, voracious marketing budgets, and sluggish student responses seem to have only whetted the appetite of online retailers for an all-out marketing assault that’s turned desperation into an art form. Thus far, BigWords far outpaces its rivals in outlandish guerrilla marketing stratagems, suiting up some 8,000 campus reps in orange jumpsuits and pitching ads that affect an aggressively puerile brand attitude. The company’s press communiqués explain that its 500-campus-strong mission is to create a “kick-ass customer experience” because today’s online shopping experience is “far too bland,” while its television ad tagline smirks: “We promise not to rip you off . . . as much.” BigWords may have a point about the blandness of Internet retailing, but one suspects that 15 tons of co-branded orange superballs, a bunch of free Jamba Juice mugs, and a faux–Gen Y smugness may not be everyone’s idea of a good time.

“If you try too hard to be cool, you’re taking a big risk,” says Bruce Tulgan, founder of management consulting firm RainmakerThinking. “The big problem with trying to be in on the joke is that you risk becoming the joke.” Tulgan, whose Managing Generation X will be reissued this June from Norton, notes that “the advertisers’ path toward the aesthetic of irony” when appealing to young people is liable to be turned back on itself when the aesthetic tides suddenly shift direction. “It’s the consumer experience that’s going to lead to brand value, not whether you seem cool.”

The “aesthetic of irony” has certainly not been lost on Purdue University assistant professor of sociology Mathieu Deflem, who has mounted something of a crusade against BigWords after encountering the orange-clad “Jumpsuit Brigade” assailing students with their wares of superballs and 5% discount coupons. “What didn’t amuse me,” exclaims Deflem, “was that I could barely enter the library of my own university because those morons were standing there almost pushing this little ping-pong ball on me!” Deflem also objects to the methods used to solicit course lists from professors. He claims BigWords listed his course on its site, and when Deflem viewed the page on his browser, the site automatically reloaded with a message that indicated he had reviewed and approved the list. “I thought that was really disgusting,” says Deflem. “That was like Kafka.”

Cannibalize or Be Cannibalized

And BigWords’ approach isn’t the only one e-tailers are trying. For the Spring 2000 semester, for example, eFollett, the web storefront for the 620-school Follett college store empire, posted course lists for some 1,000 campuses, including 200 “e-partner” schools where Follett has no physical presence, according to Tim Dorgan, eFollett’s senior vp for e-commerce. The idea is that students log on, pull up their courses for the semester, hit the “Buy All” button for each course, and the full load of books shows up at the dorm mailroom in a few days. Dorgan envisions the “clicks-and-mortar” eFollett program as the best of both worlds, because the vast majority of eFollett users skip the shipping costs and grab their books at the campus store on the way to class — a not improbable scenario, although one that flies in the face of BigWords’ and others’ rhetoric about avoiding despised bookstore lines. Dorgan also points out that Follett deals heavily in used books, and that 55% of used textbooks never leave a given campus because they’re readopted and recycled — giving the click-and-mortar model an additional advantage. “Those are books that only the local store will have access to,” he argues, adding that “having 1000 distributed warehouses might be the best way to attack this thing.” To further draw customers, music has already been added to the list of eFollett merchandise, and make no bones about it, “there will be trade books for sale very soon.”

Then there’s the belated arrival of third-largest college bookstore chain Wallace’s, which has launched under the rationale that it’s better they cannibalize themselves than be cannibalized by someone else. A Lexington, Kentucky warehouse supplies both online and brick-and-mortar stores, although the two are said to be separately managed distribution operations. Boding perhaps not so well for eCampus is the fact that Wendy’s hamburger baron Dave Thomas is a founding investor. Then again, books, burgers, and co-eds could constitute a groundbreaking synergy. Rounding out the pack is B&N-affiliated, whereof vp of marketing Valerie Valente would only say that the site has sold to schools in 50 states and 12 countries, and works with used-book titan Missouri Book Services, which has access to six million titles (and with which B&N has had a long-term alliance). The B&N college group operates about 350 stores on college campuses, making a player in the clicks-and-mortar market. Certainly with B&N’s aggregation of domain names,, and, they’ve at least cornered the online book domain name market.

Hazing for Nerds

Of course, one textbook e-tailer has undergone that ultimate corporate hazing ritual, the IPO. After a period of vacillation and having lowered its initial offering price amid a wary market, VarsityBooks went public on February 15. Its stock closed a fraction of a dollar below the $10 offering price, prompting media jokesters to declare, “VarsityBooks IPO Fails to Make Honor Roll,” and “E-Pep Rally Fizzles.” analyst Adam Lashinsky railed against VarsityBooks’ reportedly minuscule gross margins of 5.6%, and fumed that its reliance on one book distributor (Baker & Taylor, which has a stake in VarsityBooks) did nothing to help the situation. But beyond all of that, Lashinsky wrote, “the problem with is more that its time — defined as the period when high-risk, money-losing, consumer net companies flew — has come and passed.” VarsityBooks, which was still in its post-IPO “quiet period” as PT went to press, could not be reached for comment on the matter, but did report net losses of $31.5 million for the year ending December 31, 1999, a 1066.7% increase over the prior year’s $2.7 million loss. Revenues were $10.6 million, up from $132,000.

Assuming profits are not entirely out of the question, just where do textbook e-tailers go from here? One might glimpse the future in the trajectory of sites such as the soon-to-go-public education portal, which began as an e-commerce company offering discount textbooks, but is fast updating its mission as a “total communication network” not unlike or in the US, which are destination sites that offer community-based web features along with access to a variety of student discounts. CollegeClub’s textbook sales are handled by BigWords, and it seems that similar strategic partnerships between textbook e-tailers and just about everyone else — say, VarsityBooks’ link with AOL’s ICQ division — will become all the more essential to keep them from flunking out of the e-commerce marketplace.

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  1. May 19, 20112:46 pm

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