The Online Bookstore as Competitive Edge

The Online Bookstore as Competitive Edge

Some are undisputed revenue generators; some are the best marketing tools a brick-and-mortar bookstore ever had. Either way, the online campus store is here to stay.
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When the online college bookstore boom hit five or so years ago, many college and university administrators were excited about the potential and, at the same time, apprehensive about the impact. Would the online stores be profitable, or a cost drain? Would students, faculty, and staff utilize the sites, or would they comparison shop online and buy books from more competitive retailers? Their concerns, as it turns out, were valid. Yet, even though today students do buy school texts and books online and elsewhere, the value and importance of the online campus store has certainly been established. In an age when Internet sales are reportedly growing by 20 percent annually, and an IHE's Web presence is a strategic differentiator, schools must offer comprehensive and user-friendly e-bookstore access if they wish to remain competitive. The big surprise is, an online bookstore does not have to generate hard revenue in order to be considered a success. Most colleges and universities with active bookstore sites see them not only as essential marketing tools for their physical stores, but also as invaluable real-time product and campus news information sources for students, alumni, and faculty. Whether it's a moneymaker or a cost center, the online bookstore is now a vital amenity for everyone affiliated with the school.

Still, it is how an online store is managed that largely contributes to its success. And while some schools have opted to manage their site in-house (most frequently with the help of the IT department and a Web design team, but sometimes via off-the-shelf management software), others have leased out their site for management by contract retailers.

Over the past five years, through trial and error, many schools have discovered what works for their site and what doesn't. Now, as Web site development has become more advanced, schools are indeed starting to get innovative with their retailing ventures. Many have aggressively sought to add features that will set their sites apart from both IHE and Web competitors in general. Who's doing what and how are they faring? Take a look at these snapshots of seven schools determined to build long-term online bookstore success, each via a unique vision.

Store: University Bookstore - www.bookstore.washington.edu

Serving: 42,000 students (plus faculty, staff, and alumni)

Web Launch: 1995

Store Type: Independent, for-profit

Contact: Bryan Pearce, bookstore CEO

What's for Sale: Textbooks, general books, school supplies, apparel and accessories, general merchandise

Partnerships: Apple, Dell, IBM, Toshiba, Hewlett Packard, Microsoft, Booksense

Textbook requisitions for faculty

Textbook reservations

Free gift wrapping with six varieties of wrapping to choose from

University Bookstore mailing list (sign up to receive online bookstore updates)

Staff-recommended books

Faculty author selection (where faculty authors' work is highlighted)

8% patronage refund for students, faculty, and staff

The university offers a 14% lower discount on textbooks online than does Amazon.com (with patronage discount)

Free shipping for general book orders; $2.50 + $1 per item for textbooks; $3-$7 for apparel and general merchandise, based on order

"We scour the world to find truly deep subject matter to include in our store. Our students and faculty love that they can get books here that they can't find anywhere else."

Sales Stats:

1.4% of general book sales are from online sales

3% of textbook sales are from online sales

5% of students buy textbooks on the bookstore site

1.5% of faculty, staff, and students buy general books from the site

Challenge: "While buying textbooks abroad for lower prices is certainly a new and compelling alternative for students, we believe that our value proposition will keep our students with us. But it's frustrating: When a product is available at 30 to 40 percent below what we can charge, no matter how good a retailer you are, you cannot respond to that."

Bottom Line: Not making a profit

"It's break-even at best, in dollars and cents. But from a non-financial standpoint, it's been profitable in its ability to encourage customer retention and responsiveness."

Store: University of Oregon Bookstore - www.uobookstore.com

Serving: 20,000 students (plus faculty, staff, and alumni)

Web Launch: 1998

Store Type: Independent, nonprofit

Contact: Jim Williams, general manager

What's for Sale: Apparel, general merchandise

Hottest Seller: Apparel

Partnerships: Dell, Apple, Booksense

Home page links directly to bookstore site, providing easy access/convenience for viewers

Weekly Featured Items section

Staff Favorites section

Textbook reservations

Textbook requisitions for faculty

Bestseller list of fiction and nonfiction

Shipping is $5-$13, based on order

"Because the bookstore is owned not by the university, but by the students, faculty, and staff, we have more autonomy."

Sales Stats: Online sales increase 10-12% annually

"Our relationship with the athletic department has helped us grow sales."

Challenge: "We haven't sold books online, but will, to meet customer demand."

Bottom Line: Profitable

"The online store is not only profitable, it has the single most potential to grow our bookstore sales."

Store: UVM Bookstore - uvmstore.uvm.edu

Serving: 9,000 students (plus faculty, staff, and alumni)

Web Launch: 1998

Store Type: University owned, for-profit

Contact: Jay Menninger, manager

What's for Sale: Textbooks, general books, apparel, dorm supplies (including refrigerators and mattresses)

Hot Seller: Vermont maple syrup ($50,000 in sales over the last five years, with a sales increase of 10-15% each year)

Hottest Seller: Textbooks

Partnerships: Nebraska Book Company (providing management software, outsourced services and staff, and products for college bookstores), Boise Cascade

"The Nebraska Book Company's software is a slick system. It operates on fairly real time, so if it says we have something in stock, we have it in stock."

Offers online-only apparel promotions

Textbook reservations

Textbook requisitions for faculty

$7.95 shipping (flat rate)

Promotes bookstore site in-store by passing out free Web site lanyards, coffee cups, and pins

Sales Stats: Nonbook online sales have increased 10-15% annually

"If only in-store sales were doing as well as online sales, we could have retired. They're up 7 percent, but that's not as good as online sales."

Total online sales have grown from $25,000 in 2000, to $548,000 in 2003

"Our textbook sales skyrocketed after we added online textbook reservation in '99."

Challenge: "The site is huge compared to what I've seen at other schools. As it is, everybody wants us to be L.L Bean, so we're trying to meet that demand by making the site even bigger."

Bottom Line: Profitable

Store: Swarthmore College Bookstore - bookstore.swarthmore.edu

Serving: 1,350 students (plus faculty, staff, and alumni)

Web Launch: 1995

Store Type: University owned, nonprofit

Contact: Kathleen Grace, director

What's for Sale: Textbooks, apparel, general merchandise

Hottest Sellers: Apparel and gifts

"As a smaller store, it's difficult for us to do cutting-edge, exciting stuff."

Partnerships: ePOS from Sequoia Retail Systems, Inc.

Families can order care packages for birthdays and midterm stress relief

Students with bookstore debit accounts and their parents can deposit funds online, directly into a student's account

Faculty Picks (faculty recommended books for incoming students)

Shipping is $3.95-$7.95, based on order

"The debit account deposits are very popular. Kids call home and say, 'I need more money,' and parents can log on and make the deposit. It's a convenience for them, but benefits us, too."

Who's Buying: 1% of students buy textbooks online

Challenge: "Only four employees (no IT people) makes it tough to keep the site fresh. But we can provide better customer service than if we had leased out to a contract retailer."

Bottom Line: Not making a profit

"Until we pay all site maintenance expenses, we won't make a profit. We're close to breaking even, but still losing money."

Store: CU Bookstore - cubooks.colorado.edu

Serving: 28,000 graduate and undergraduate students (plus faculty, staff, and alumni)

Web Launch: Launched in 1995, started selling products in 1999

Store Type: University owned, nonprofit

Contact: Pamela Mills, director

What's for Sale: Textbooks, general books, course catalogs, school supplies, apparel, general merchandise

Hottest Sellers: Apparel, general merchandise

"The key is to pick high-volume merchandise that moves quickly."

Partnerships: Booksense, Boise Cascade, Dell, Apple, Gateway

"Sometimes you don't know whether you're on one of our partners' sites or ours. We wanted a seamless transition for our students, and didn't want them to feel like they were being bounced around."

Sales Stats: Online sales have increased 15-20% since 1999 (more rapidly than physical store sales)

Shipping is $6-$35, on order of $100-$500. Over $500, 5% of order.

New Products page in Apparel section

Extensive graduation section

Challenge: "Our students say they're not sure they can trust [independent bookstore] sites. They wonder: Is it really the right book? Can I return it? What happens if it doesn't come? How do I resolve questions and issues? With our site, all of these questions get answered."

Bottom Line: Profitable

"But we're not a for-profit group trying to slam down sales; we're an auxiliary fund."

Store: UCLA Store - www.uclaestore.com

Serving: 35,000 students (plus faculty, staff, and alumni)

Store Type: Independent, nonprofit

"Our site is totally independent. We wanted to do it in-house and be in control of what is presented; we didn't want to work through a third party to get changes executed."

Contact: Keith Schoen, director of Retail Operations

What's for Sale: Apparel, general merchandise, textbooks, books

Hottest Seller: Apparel

Partnerships: Apple, Dell, IBM, Hewlett Packard, Gateway, Champion, Russell Athletics, Jansport

24-hour call service for Web orders/questions

Textbook requisitions for faculty

Textbook reservations

Shipping is $3.95 + .95 for each additional book; $5-$11 for apparel, based on order; free shipping for orders $100 and up

Sales Stats: Mail, phone, and Web textbook orders were $250,000 in 1997; have grown to $1 million in 2003

Bottom Line: Profitable

"Having a site is a service issue, not a profitability issue."

Store: The Harvard/MIT COOP - www.thecoop.com

(Information here is based solely on Harvard's section of the Coop site.)

Serving: 18,000-20,000 students (plus faculty, staff, and alumni)

Web Launch: 1994

Store Type: Independent, for-profit (shares One Touch Shopping bookstore site with Massachusetts Institute of Technology)

Contact: Jerry Murphy, president of the Harvard Cooperative Society

What's for Sale: Apparel, general merchandise

"Someday we'll sell books online, when we figure out the best operational way to sell them. We would want to make sure the books we put online are reflective of our company and the personality of the Coop."

Partnerships: Affinity Identity Programs (provider of online catalog fulfillment orders); B Sharp Technologies (custom software development and integration provider; builder of the Coop's Web site); Ringware, Inc; M. LaHart & Company; Herff Jones, Inc.

Site directly links to these companies' sites

"We're big on outsourcing. It helps us to expand assortment without taking the inventory risks associated with it. These manufacturers are set up to drop-ship goods directly to the customer."

Relationships: Tiffany & Company; Brooks Brothers, Chelsea Clocks (the site sells these goods but does not directly link to sites)

Clearance Items section, with Web deals that often differ from those offered in-store

Patronage Rebate (If the Coop earns a profit during the year, a portion is returned annually to members, as a patronage refund. Membership is $1 per year and members receive a 10% discount at checkout)

Faculty Services page (provided by Barnes & Noble College Bookstores, Inc.) includes Faculty Center Network (faculty can browse over 125,000 textbooks with accompanying info) and textbook requisitions for faculty

What's New page (lists events, discussions, and readings that take place in the campus bookstore)

Shipping is $7.50-$16.50, based on order, up to $200; over $200, shipping is 8%

Who's Buying: Alumni are biggest buyers

"From a selling point, we look at the Web as a way to communicate to far-flung alumni and affiliates of Harvard and MIT. They are our focus."

Bottom Line: Profitable


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