E-Tailers Grab Part of College Textbook Trade

The venerable college bookstore, target of student grumbling about long lines and high prices, has come under attack from newly established Internet companies in a fight that is transforming the way textbooks are sold.

No longer are students from UCLA or USC forced to buy their books from the campus bookstore. Instead, they can order them from an Internet bookseller that claims lower prices and quick delivery, without the lines.

College bookstores say these Internet competitors have taken only a tiny percentage of the $5-billion-a-year textbook business. But they have shaken the industry to its title pages, prompting bookstores to fight back with their own online operations, better service and a lawsuit.

College stores no longer can consider the sale of textbooks their near-exclusive domain.

“I think across the country we’re seeing [college bookstores] losing their complacency because of these online booksellers,” said Daniel Archer, director of the USC bookstore.

The five largest online companies say the number of customers they serve is growing by volumes.

According to research firm PC Data, the number of people logging on to online booksellers grew 140% from August to January. “The shocking thing is that even a year and a half ago, you didn’t see the presence you do now,” said Jeff Friedel, manager of Stanford University’s bookstore. “It’s almost like an overnight boom.”

Students report mixed experiences with Internet booksellers. Some tout the money they’ve saved--generally 10% to 15%--but others complain about prices not being low enough to matter, books not being available and delivery problems.

“There’s no sense [in] ordering books online if you don’t get them on time,” said Sandra Paulo, a junior at UC Irvine.

UCLA freshman economics major Alexis Walters saved about $30 in the spring quarter when she bought $200 worth of books online.

“I don’t really do it for saving money,” she said, “but the lines in [the bookstore] are so long, it’s just so much easier to do it on the Internet.”

Shin Hwang, a junior sociology major at UC Irvine, saved $15 to $20 per book at Bigwords.com because she was able to find them used.

But UCLA law student Frank Dunnick had the opposite experience. He bought a new book online for $65 and later found a used copy in the bookstore for $48.

Aggressively Wooing Students

Online booksellers say that grabbing even a small part of the textbook market, one in which the students spend an average of $600 a year, would be lucrative.

“Is it reasonable to think of 10% [of college students] migrating online?” asked Patrice Litchfield, president of Textbooks.com, which is affiliated with Barnes & Noble. “Absolutely. Twenty percent eventually? It’s not that absurd.”

This newly competitive world of college textbooks was illustrated at the start of the spring quarter this year at UCLA, which has the highest sales in the country, when clothing, computers and other goods are included. Students there waited in line 10 minutes just to get into the bookstore. Inside, another line twisted around the bookshelves while students waited for a cash register.

Not so long ago, students had little choice. This year, though, a few steps away from the Ackerman Union bookstore, the two most visible online booksellers, Varsitybooks.com and Bigwords.com, had set up tables on Bruin Walk.

The raucous Bigwords crew, its numbers swollen by a fraternity it had hired, wore orange jumpsuits and passed out Superballs and Frisbees with the company’s name on them. Across the walk, Varsitybooks gave out granola bars, water bottles and coupons for free shipping.

Virtual bookstores have changed the complexion of the textbook world simply by advertising aggressively where there was little promotion before. In all, the online bookstores have spent $50 million to $100 million on ads on radio, TV, newspapers and magazines.

The new booksellers claim discounts of as much as 40%. Some offer an additional 5% cut if the professor has signed up as an affiliate with the company.

Textbook.com’s faculty affiliate program offers professors 5% of the sale from books their students buy. University officials discounted potential ethical problems.

“I doubt that in more than a minute segment of the community, would any professor choose books that would somehow give him or her some kind of minute or minuscule economic advantage,” said Sheldon Steinbach, general counsel of the American Council on Education. “It looks like a scandal. It amounts to less than a hill of beans.”

Few students report saving anything close to 40%. But there are signs the tactics may be working. At UCLA’s bookstore, textbook sales are down 1% to 2%. Patricia Eastman, executive director of the Associated Students of UCLA, which runs the store, said the drop may be caused by competitors.

The new e-tailers have cast themselves as renegades fighting the monopolistic college store. They have played on the horrible reputation of college stores: the long lines, the lack of books for every student in a class, and, of course, high prices.

College bookstore managers acknowledge that their service may not have been the best, but they say they’ve gotten a bad rap for the high prices of books, some of which cost more than $100. For that, they blame the publishers.

“The student feels ripped off,” USC’s Archer said. “I become the victim.”

Bookstores charge 25% to 33% over wholesale for their books. But after costs, said Laura Nakoneczny, a spokeswoman for the National Assn. of College Stores, bookstores make just 4% on textbooks.

UCLA’s Eastman said most of her bookstore’s annual $2-million profit comes from clothing. About $1.5 million subsidizes the student union, with the rest going into a building fund.

Campus Stores Trying to Improve

Competition from online booksellers is the latest change to hit college bookstores in the last 10 years. The decade has seen a growing number of colleges lease their stores to such companies as Barnes & Noble and Efollett, both players in the online world.

The emergence of Amazon.com already had students ordering Toni Morrison novels or other literature from the pioneer e-tailer.

Many college bookstore managers have tried to respond to the online challenge.

They have added cash registers to shorten checkout lines and tried to make book buying more convenient. USC students no longer must check their backpacks when they enter the bookstore, and the wait in line has been reduced to six minutes, Archer said.

More than 300 schools, including Cal State Fullerton and UCLA, have started their own Web sites where students can order books online and pick them up or even have them delivered. At the Fullerton campus, the online business is growing 20% to 30% every semester, and it now makes up close to 10% of the book business, said Omar Iftikhar, information systems manager.

Colleges are putting in a bigger stock of used books as a way to offer cheaper prices. Harvard University’s used book sales have tripled in the last three years.

College bookstores also have gone to great lengths to try to disprove one of the biggest attractions of the onliners--their claim of cheaper prices. The bookstores insist that the discounts exist on only selected books, that shipping costs eat up most savings and the onliners don’t stock all textbooks.

The National Assn. of College Stores has taken the issue seriously enough to file suit in October against Varsitybooks.com in Washington, D.C., where the bookseller has its headquarters.

The suit, which is pending, accuses the company of misleading advertising by claiming it offers discounts of 40%. The suit does not ask for monetary damages, but seeks to force the company to change its advertising.

Eric Kuhn, the former lawyer who is Varsitybooks chief executive, said the suit is without merit.

The lawsuit is just one problem his company faces.

Varsitybooks.com, the only publicly traded virtual college bookstore, showed revenues of $12.2 million for the first quarter of this year, higher than its $10.5 million in revenues for all of 1999. But investors have shown little confidence in the company, and its stock has plunged to less than $2 a share, down from its opening price of $10 in February.

Still, most experts expect the online textbook world to keep growing.

“We’ve don’t know if we’re winning the battle or losing it,” said Iftikhar at Cal State Fullerton. “These companies are a viable threat. They will affect us a lot more in the future, and we know that.”