College Stores Survive e-Slaught
John Mutter -- 3/20/00
Online-only text retailers get an A for effort, but overall grade is I for incomplete
 | | VarsityBooks.com: Big Man on(line) Campus. |
Talk about rush. Since January 1999, when rush period for the second semester of the academic year began, the campus at the University of Washington in Seattle, Wash., has been barraged with advertising and promotions from online-only textbook retailers. The efforts have ranged from frequent, large ads in the student newspaper to ubiquitous posters and commercial messages written in chalk on sidewalks to attempts to get instructors to recommend the e-tailers and signing up student groups as affiliates.
"Everything you've heard about their promotional activities has been tried here," commented Robert Cross, general manager of the University Book Store, which serves the University of Washington.
Moreover, the online retailers engaged in high-profile national advertising on television and radio and on-line sweepstakes in their bid to seize some of the $3.2-billion textbook market. VarsityBooks.com, the original online textbook retailer, which opened for business in the summer of 1998, alone spent more than $20 million on advertising and marketing last year. BigWords.com, the other major online-only text seller, pumped comparable amounts into its efforts to lure students.
Although many bricks-and-mortar college booksellers consider Amazon.com a textbook competitor, too, it d sn't ape the text-only sites by engaging in such targeted advertising and marketing campaigns or by posting course lists. In addition, booksellers did not mention the Web sites of college store leasing companies Barnes & Noble College, Follett and Wallace's--textbooks.com, efollett.com and ecampus.com, respectively--as online competitors.
The message of the advertising campaigns was that online text sellers have the books, offer the best deals and are convenient. Perhaps most important, they emphasized that these e-tailers use a medium that today's students consider as natural and preferable as, oh, downloading music for free.
So what was the effect of the dot-com campaign on the University Book Store? "So far this year, our textbook sales are up 5.5% at a time of static enrollment," Cross said.
In part, this happy result came about because of counter-promotion by the store and increased use by students of the store's Web site. While University Book Store did exceptionally well despite the competition, the experience of many other traditional college retailers with whom PW spoke was also positive, if not quite so strikingly good--many were happy to have sales remain flat or go up slightly, considering the dot-com barrage.
Indeed, by one measure, the dot-coms deserve a D grade. VarsityBooks.com reported sales last year of a little over $7 million, which, as a college bookseller sniffed, is "what a good many college stores do on their own."
Suzy Staubach, trade manager of the UConn Co-op General Bookstore, Storrs, Conn., serving the University of Connecticut, offered a comment typical of those booksellers who felt they had weathered the storm well: "We feared the worst because there was heavy marketing here. Although we're seeing little areas where we've been affected, it hasn't been in a large way."
Some stores have taken a hit, but are not overly concerned. At Auraria Book Center, Denver, Colo., which serves the University of Colorado at Denver, the Metropolitan State College of Denver and the Community College of Denver, trade buyer Eric Boss said, "Sales were a little weak this spring but nothing drastic, nothing frigh- tening. It was better than we thought it would be."
However, the UC Irvine Bookstore, serv- ing the University of California at Irvine, believes the compe-tition has taken a sig-nificant bite of text- book business. "It's difficult to track trends because our student population is growing," Dan Dooros, associate director, said. "But text sales are static, and we feel they should be increasing." According to an internal analysis, the average student in winter 1999 bought 3.5 textbooks while the average for winter 2000 is 3 per student.
Power of Perception
Dooros attributes part of the decline to changes in attitude among students. Buying textbooks on the Web is "new and the thing to do" for students, he noted. "Students are more and more Web savvy," added Matt Astrella, general book manager at the UC Irvine Bookstore.
And yet many students seem to have a kind of naïve faith in the new medium. Students are "very willing to believe Web sites," Staubach told PW, and they're particularly receptive to the dot-com claims of large discounts and fast and accurate shipping.
Julie Summerfield, manager of the Haverford College Bookstore, Haverford, Pa., ech d her, saying, "The main problem right now is attitude. The students think the real stores will rip you off, and online stores will save money."
This is probably the major frustration for most booksellers. Again and again, booksellers contacted by PW indicated that their prices are competitive and their service and policies are better than online sellers'. They also emphasized that they stock almost all necessary titles and have them available for immediate pickup; they have the texts in whatever book-coursepack-CD-ROM configuration the professor wants; and they often buy back books at the end of the semester.
Consider the matter of pricing, which has been a key textbook battle issue, leading to a lawsuit by the National Association of College Stores against VarsityBooks charging that its claims of discounts "up to 40%" are misleading and illegal.
Summerfield, for example, said that she "actively" compares prices, and stickers most texts within $1-$2 of titles sold by VarsityBooks, "We may not beat them, but we're close."
She complained, however, that students aren't comparison shopping. "They go to a site, see the 40% discount claims and say, 'See, I'm saving this much.' "
Several booksellers did note that they found it difficult to match some prices at BigWords, which sells many titles under the college bookstores' cost. More than a few speculated that the company was getting handsome deals.
Most publishers contacted by PW for this article did not wish to comment or spoke only off the record. Even the head of the college division of the Association of American Publishers declined to talk, saying that the topic was "proprietary."
Service Issue
Price is becoming less and less the key issue in whether students buy their textbooks online. As Tim Dorgan, senior v-p for e-commerce at eFollett, observed, "Last summer the big thing was price. In the fall, it was all about service."
Other booksellers agreed, noting that students become much more concerned about service after ordering a few times from online text retailers. As Eric Boss at Auraria put it, "They're getting disillusioned. After trying two or three times to buy a text online and not getting it, they come in and say, 'Well, you're selling it for 45 cents more, but you have it on the shelves. I'll take it.' "
Other problems: students find that they don't receive books in the promised two or three days or they receive the wrong edition or the online bookseller was out of stock temporarily.
Not surprisingly, in the area of service, unlike price, traditional college booksellers feel they have a clear superiority over their online competitors.
Dooros at UC Irvine noted: "If the professors order their books on time, we have 98% of books on the shelf the day before the class starts."
Counterpromotion 101
Some booksellers said that they hadn't done enough yet to battle the dot-coms, while others said they had put up posters, handed out fliers and engaged in other means of alerting students, often using or borrowing from sample materials produced by the National Association of College Stores on the issue.
Cornell Campus Store, Ithaca, N.Y., is "very proactive in the public relations game," according to Margie Whiteleather, strategy manager. The effort includes ads in the Cornell Daily Sun and campus newsletters, in which the store explains "the benefits of buying from a physical store, the disingenuousness of 40% discounts and the fact that online booksellers often sell older editions or editions that aren't the customized ones professors want."
The University Bookstore in Seattle ran ads and put up posters "pointing out the fallacies in the claims made by our online competitors and the risks students take when they purchase from them," Bob Cross said. Besides problems with discounts and charges, as well as delivery claims, the store challenged "the completeness and accuracy" of the university course lists posted on their Web sites. The store also emphasized that because it operates like a cooperative, it gives rebates--currently 10% on all purchases--something the dot-coms don't do.
UConn Co-op instituted a "textbooks to go" program a decade ago that is proving especially useful in attracting students tempted to order online. Borrowing an idea popularized at the University of Tennessee Bookstore, UConn matches course requirements with students and fills a campus bag with all the books needed by a student who then comes to the store and pays for it--after making any adjustments. "The freshmen like it a lot," Staubach said. "It's the name of the game: convenience."
The UConn store also benefited from something that any store might encourage: a comparison-shopping expedition by school newspaper reporters. In this case, the story, which ran on the front page, concluded that the store was "most affordable and quickest."
Responding in Kind
Some college booksellers noted with embarrassment that they haven't done much to develop Web sites of their own to compete with the online companies.
But the ones that are selling online are relatively enthusiastic. At Auraria Bookstore in Denver, online textbook sales rose tenfold in the current semester over the previous one. At about $54,000 in sales, "it's still a very small percentage," Eric Boss said. But he believes this avenue of selling will become more important. Two of the store's schools are doing online courses; many students of those courses buy texts through the store's site. And some of the traditional-class students commute long distances and prefer the convenience of buying online--although many customers choose to come to the store to pick up their orders.
Similarly, eFollett, with 600 Follett-leased stores as well as several hundred non-Follett stores, allows students to pick up their textbooks at the local store or have them shipped. "So far the vast majority choose to pick up in the store," Tim Dorgan said.
The Cornell Campus Store has "beefed up" its Web site and provides links to the course sites that many professors maintain, according to Margie Whiteleather, who added, "We think our business model, where they can look up the book list online and buy the books in-store, is most effective for students."
The University Bookstore in Seattle has had a fully functional Web site in operation for two years but had downplayed it because it preferred to have students go to the store and because online transactions cost the store more than in-store ones. But with the VarsityBooks and BigWords deluge, it decided to promote its site so "students could more easily compare our prices and services," Cross said.
Cross believes that textbook sales online are "in their infancy. I think it will grow fairly rapidly over the next year or two, maybe reaching 10%--15% of textbook sales, and then grow only slowly or not at all." He added that most of this growth should come from college stores, not VarsityBooks and BigWords.
Despite the mostly positive news, most booksellers don't think the e-battle is over. As Suzy Staubach at the UConn Co-op said, "It d sn't mean it won't get tougher next semester."
Tale of Two E-Booksellers
For two companies that share the goal of selling textbooks online, BigWords.com and VarsityBooks.com have taken strikingly different marketing approaches.
Both have ballyho d student rep networks that attempt to tailor campaigns to individual campuses. But that's about where the similarities end. First, there's the issue of size. Varsity boasts nearly 3000 reps at 600 colleges across the country. At headquarters, about 40 employees (out of 230) communicate with these reps, serving as sounding boards for possible marketing campaigns and counseling them when a problem arises with the administration.
BigWords.com's program has been more modest; "campus consultants" number just over 1,000. Few rep coordinators work out of the San Francisco base. Instead, the company places nine regional managers around the country to serve as links among campuses.
The differences reach into more fundamental areas. Helen Kim, Varsity's v-p of marketing, said the company's most effective tool has been its relationship with professors. Students choose the largest classes and e-mail faculty members about Varsity. In some cases, this will result in a professor mentioning the bookseller in class. In others, a rep will hand out flyers at the door comparing prices between the campus store and Varsity for the books in that class. The company also has an affiliate program wherein campus clubs earn 5% of sales they facilitate.
If Varsity's reps comes off as the diligent student--e-mailing professors, building networks and deploying tactics learned at a semiannual seminar--those from BigWords are their symbolic opposite. Ever the boisterous class clown, the company's proudest marketing moment comes when men and women in orange jumpsuits bound onto campus passing out BigWords superballs. BigWords's spokesperson, appropriately, is MTV's Tom Green, a gonzo personality.
These paths could lead to very different places. Varsity is moving in the direction of becoming a direct-marketing company that collects money from partners so that students can promote their brands. (At press time, a deal was imminent between Sallie Mae and Varsity in which the loan corporation would pay the company $2 million for promotion.) BigWords is turning into more of a portal--it already sells music and gear, and its ample warehouse space allows it easily to offer a buyback program for students.
--Steven M. Zeitchik
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