Monday
Feb 08, 1999

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Business

Text appeal

Selling textbooks is big money, low glamour pursuit

By Dan Rubin
MEDILL NEWS SERVICE
WASHINGTON More than two years ago, Thai Tran saw a fellow Stanford University student standing on the steps of the main bookstore and complaining about textbook prices.

Although that student, Danny Bramzon, dropped out of sight after setting up a used book exchange on the bookstore's steps, his message stayed with Tran, now a senior majoring in computer science.

Earlier this year, as Tran was working on his senior project building a Web site that automatically compared prices among the various on-line auction sites he came upon an intriguing idea.

Looking at the engine he had created, Tran realized he could use it to compare textbook prices charged by the various on-line vendors that have sprung up in the last year.

Thus Tran created Booksmart (http://booksmart.stanford.edu/), a site that displays all of the textbooks needed for Stanford students and automatically retrieves prices.

"It seems like everybody complains about the bookstore," said Tran. "Compared to the bookstore, buying on-line is cheaper."

Tran's site tapped into an area that has quickly become one of the hottest areas of growth for on-line booksellers. Providing textbooks more cheaply has become the mantra of start-up Internet companies that are challenging the once-dominant industry players like university-run bookstores and private chains like Follett and Barnes and Noble.

The market has tremendous potential: Students spend nearly $3 billion a year on required new textbooks alone, and nearly 100 percent of college students have access to the Internet. The textbook sites, much like Amazon.com, claim they can offer prices anywhere from 15 to 40 percent off the suggested retail price.

"For most consumers, it is their first purchase on-line, and it is a really big one," said Matt Johnson, a founder and chief executive officer of BigWords.com, a San Francisco-based firm that went through its second major buying period in January. "Our growth has been unbelievable."

Johnson, 23, and three friends founded BigWords in spring 1997 and began operations, offering both new and used books, in September.

"We started marketing it to eight schools in California, and we were getting orders from 250 schools across the country in a week," he said.

One of BigWords' main competitors is VarsityBooks.com. Started by two George Washington University law students and based in Washington, D.C., VarsityBooks sells only new books.

"Bookstores are the last bastions of monopoly-like behavior," said Eric Kuhn, who founded VarsityBooks along with fellow GW student Tim Levy. "They have been able to dictate price for years. Our No. 1 one draw is our ability to offer price savings."

Kuhn and Johnson stressed the convenience of on-line textbook shopping, which is open 24 hours, thus suiting college students' notoriously late nights.

VarsityBooks and BigWords aren't the only Web sites selling textbooks. General interest e-commerce sites such as Spree.com and Buy.com also are selling books that used to be available to students only at the local bookstore. In fact, Tran said, his comparisons have shown those sites often offer the best deal.

Traditional textbook shops aren't about to surrender to their on-line competitors, though.

"The brick-and-mortar store is still the most viable option for students looking to buy textbooks," said Chuck Kratochvil, general manager of the UC-Davis bookstore. "We are the ones that can provide the most convenience like easy returns for students."

Kratochvil said that bookstores also are better places for students sell their books at the end of a semester. BigWords allows students to sell them on-line.

College bookstores are also about to get into the on-line market in a big way, said officials with the National Association of College Stores, a trade group that represents nearly 3,000 college bookstores.

"On-line businesses aren't going away," said Jerry Buchs, a spokesman for the organization. "We are going to give our members a way to have an on-line presence."

That presence, expected to be announced next week, will be called CourseWeb, Buchs said. It will allow college bookstores to set up a page with detailed course information and give the students the ability to reserve and buy books from the bookstore.

The group also will announce an alliance with collegestudents.com, a Web site based in Austin, Texas, that caters to the local needs of students.

Follett Corp. and Barnes and Noble College Bookstores Inc., the two largest chains of retail booksellers, have slowly entered the on-line market. Follett has gone on-line with efollett.com, which acts much like CourseWeb and uses its 500 stores across the nation as anchors.

Barnes and Noble College Bookstores, a unit of Barnes and Noble Inc., announced two weeks ago that it had gone on-line at www.textbooks.com.

Another potential player in the market is on-line used book swaps such as Book Market (http://bookmarket.stanford.edu/).

These sites, usually run by student governments at the college, allow students to post their own prices for their used textbooks.

One of the most important hurdles that faces all the players in the textbook market is the ability to provide a complete breakdown of books by class and instructor instead of just offering a traditional search engine to search by book.

That improvement would allow students to buy all of their books for one class in one spot. Tran's site, Booksmart, has that capability and allows Stanford students to see the total price of their order (including sales tax, shipping and other costs). BigWords is working on a system that would allow instructors to post their book lists on-line.

In the meantime, VarsityBooks.com took a big step in that area two weeks ago, when it signed a marketing agreement with International Thomson Publishing, a large educational publisher.

When ITP sales representatives talk to instructors about ordering books for the next semester, they will recommend VarsityBooks as a place where the instructors can direct their students.

That move has upset traditional book retailers, who say that ITP is giving Varsity an unfair advantage.

"Students are the ultimate purchaser of our goods," said Robert Christie, chief executive officer of ITP. "Varsity gives us access to information, and we will recommend Varsity as way to sell books."

As for the future of textbook retailing, industry leaders and students believe that the on-line retailers and traditional retailers will achieve some sort of equilibrium.

"We see a huge opportunity for bookstores," said Christie, "but the bookstore has to change its business model."

Tran agreed that on-campus bookstores always will have a significant presence and that while price is very important to most students, it isn't the only factor.

"A lot of Stanford students experiment with classes at the beginning of the quarter trying to figure out what they are going to take," he said. "So they may not have the time to order something on-line and wait for it."

Future innovations, such as electronic books and course materials that are placed entirely on-line, could threaten all textbook retailers because they could render the textbook obsolete.

"Publishers will be able to customize material on the Web just pieces of it," said Christie. "The next evolution will be that students go on the Web and buy an on-line course pack. The huge advantage is that you don't have to buy the whole book just a one-time licensing fee."

Back at Stanford, Tran is ready to move his site off the campus server and is thinking about opening his own portal business dealing with textbooks.

On-line retailers, like Amazon, give commissions to site owners when a purchase is made from referral sites.

"A lot of people like the site, but I am unsure how successful it will really be," Tran said.


 
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