Last week, Amazon quietly opened its second physical campus store at Purdue University, in West Lafayette, Ind. The company opened its first Amazon Campus store—a 2,360-sq.-ft. location—at Purdue’s Krach Leadership Center on February 3. A third Amazon store (roughly 3,000 sq. ft.) is slated to open at the University of Massachusetts at Amherst in July, and the company’s fourth store (roughly 2,200 sq.ft.) will open at University of California, Davis, early next year.
Amazon is also co-branding online campus stores with all three colleges, following a pilot program that it launched with UC Davis Stores in the fall 2013. So far the megaretailer has moved slowly into the college store market and is attaching itself to larger schools, with 20,000 students or more, in states where it already collects sales tax.
Though the number of Amazon campus stores is small compared to industry leaders such as Follett, with 970 locations across the U.S., or Barnes & Noble College, which serves 717 campuses, Amazon’s physical stores and lockers—and its accompanying cobranded websites—give it significant access to the hearts and wallets of the next generation. As Jon Alexander, senior manager of Amazon Campus, noted in an educational session at the 2015 Camex trade show for college stores earlier this year, “We look at student customers as important customers; they’re future customers for us. We’re trying to provide massive convenience to students on campus, anything they need for life on campus.” And at schools where Amazon has partnerships, students can get much of what they need via free one-day shipping to the campus store.
Using open-record laws, PW obtained copies of Amazon’s agreements with the first three schools to add campus stores. Other universities, such as UC Berkeley, have Amazon lockers but have not taken their partnerships further. Purdue signed a four-year contract worth a total of $1,703,000 last August, and UMass’s $1,450,000 five-year contract went into effect in March. Those numbers represent a minimum guarantee, based on having made Amazon their official textbook vendor and integrating it into their learning management systems. The schools earn a commission of up to 2.5% of qualifying revenues for customers whose items are shipped to an address within the campus area, and 0.5% for purchases shipped off campus. Additionally, UMass earns 2.5% of qualifying revenue for purchases of digital products.
Both universities also continue to maintain relationships with Follett. The company has operated an off-campus location in West Lafayette for the past 70 years. “School administrators and students continue to tell us they want the campus store experience and the amenities it brings to campus,” Follett spokesperson Elio Distaola said. Follett will close its textbook annex in Amherst, but will continue to operate a school store that sells licensed merchandise.
At UC Davis, Amazon’s role is to supplement the school’s existing retail services, while the UC Davis stores—which are owned and operated by the division of student affairs—continue to serve as the official seller of textbooks. Consequently, its contract, which runs from 2014 to 2020 and provides for automatic one-year extensions, offers a smaller guaranteed annual payment ($125,000) and lower terms. The commission is 2.15% for qualifying revenues from customers whose purchases are shipped within the campus area, and 0.5% for purchases shipped off campus. The school also receives 2.15% for purchases of digital products.
Jason Lorgan, director of UC Davis’s stores, sees Amazon as providing another option to students. “We believe presenting our students with many choices is better for them as consumers than were they to only have one choice,” Lorgan said. “Amazon can provide our campus community with hundreds of thousands more items than we could stock on campus. We believe our model of a university-owned-and-operated store, combined with our Amazon program, creates a model that is more advantageous to our students than either model on its own.”
Amazon has also helped reverse the downward sales trend that the UC Davis stores experienced beginning with the recession. “The additional revenue has been very welcome,” said Lorgan. “Over 80% of what we’re collecting a commission on are things we don’t have in our store.”
For its part, Amazon has been pleased with the progress it has made with its first campus store. “Since the February launch of Amazon at Purdue, our first-ever pickup and drop-off location, the response from Purdue students and faculty has been overwhelmingly positive,” said Ripley MacDonald, director of Amazon Student programs in a statement.
While Amazon may be positioning itself as the new type of campus store for the digital age, it is also using its newfound campus connections as an opportunity to market programs such as CreateSpace and Kindle Direct Publishing to faculty at Purdue and other schools. Just how quickly Amazon will ratchet up the number of campus stores it operates, or whether it can adjust its model downward to accommodate smaller stores, isn’t clear yet. An Amazon spokesperson would only say that more campus partnerships will be announced soon.
