How College Retail Can Thrive

by Aaron Hurd

Almost everywhere you turn you hear about the demise of retail. Gap, Sears, K-Mart, J.C. Penny, RadioShack, Teavana, Macy’s, Abercrombie & Fitch… one could fill an entire blog post with just the list of stores that are making major cuts or have gone out of business this year alone. Even Warren Buffett has pulled almost all of his money out of retail. While bricks and mortar retail generally may be in what seems like an inescapable death spiral, there is hope for retailers who are willing to invest in innovation. A unique product mix, becoming a destination, and connecting with customers on their terms will be the keys to stores thriving.

Riches are in niches and service.

Nationwide, stores specializing in vinyl records are thriving; there are three such stores within walking distance of my apartment. All of these stores share two things in common: They offer a unique product that can’t be purchased elsewhere and they have knowledgeable sales people who are truly passionate about the product they are selling.

College stores can replicate this. First, accept that you are not going to be all things to all people and that there are many items in your store where you’re competing with Amazon on price. Eliminate these commodity items, even if it means eliminating some textbooks. If you can’t make a premium margin on it, it should be gone. Focus on items that are unique to your store, or that students need right away.

Knowledge comes from diversity of hiring. Find and hire people who are passionate about the items you sell. Pay more to get that junior year design major to help with art supplies or the computer engineering major to help sell electronics kits. Bring on a parent with kids in college to help with gifts for mom and dad.

Become the destination and don’t be afraid of people using your product for free

There is a reason why I am writing this from a coffee shop near my house. I don’t come here for the food, or for the coffee, though both are excellent. I come here because it is my “hangout” and I end up buying stuff along the way. Certainly I buy MUCH more coffee, but I often pick up other things while here. Gifts for friends coming into town? Those are now usually cookies from this shop.

College campus bookstores are well positioned to capitalize on this, as they generally have access to prime hangout space. Cull non-performing merchandise and spend some of your floor space creating places to meet, enjoy coffee, or work. Encourage students to use your space to meet, work, and play and it will pay dividends.

Barnes and Noble does to great effect. People are welcome to browse, pick out a book, read a chapter, and enjoy a coffee. Sure, there will be people who come in and never make a purchase, but these customers can be dealt with individually. The proof is in the numbers: Barnes and Noble Education’s 2017 revenues were $1.4Bn with 22% gross margins.

Meet your customers where they are.

Younger consumers are native users of technology. The average college freshman was six years old when Facebook launched and got his first smartphone before he was 11 years old. Marketers immediately assume that the solution is bombarding their customers with Google AdWords, Facebook, and Instagram. But invading a person’s social media risks turning consumers off.

For a college freshman, their smartphone is a window to their world and human connections. Rather than cramming advertisements into social networks, use the tools to provide a superior customer experience. First, forget about text message and social media marketing and use the platform to provide as much service as possible. In the college store space, this can mean rental return reminders, book buyback offers based on purchase history, or helpful tips for freshmen on campus. Second, lower the barriers to being reached and respond to your customer’s text messages with a real human. They don’t want to text “Hours” to figure out when you are open, but they do want to ask you “I need 17x22 drafting paper for my design class. Do you have it?” Your approach to messaging could turn these inquiries into additional sales.

 

Retail is not dead… far from it, but innovation in retail will be the key to retail thriving. Stores that curate a unique product selection, hire passionate and knowledgeable staff, create an experience that draws customers, and foster human connections with their customers will win. For those who don’t bother, well, there’s always Amazon.

A Call for Service

by Joe Schneider

As I’ve been trying to keep up with the fast-moving education materials retail space, I’ve been contemplating one question: “Are course materials really on a one-way crash course for commodity land?” Is the single driver in all course material purchase decisions really down to price?

What happened to the educational value colleges provide? What happened to the college dream of building a better life than your parents had? What happened to the service of educating?

In the midst of fierce online competition, college bookstores are desperate to find a new model for making their stores work. Some have suggested that bookstores should not take a margin on books. Others have suggested “the house is burning down” and a new business model is needed entirely.

“All-inclusive access will drive down costs by allowing bulk buying discounts!”

“Open education resources will mean nobody pays for educational content!”

“E-texts will save the day by reaping the benefits of reduced manufacturing and distribution costs.”

Yet, students remain a perplexing and fickle bunch. As the College Bookstore magazine reported in its July/August 2017 issue, the South Dakota Board of Regents determined that an overwhelming majority of students still prefer paper-based textbooks, even after being forced to use e-textbooks for a year. What was the SDBOR’s response? Mandate e-textbooks for the students.

What if, instead, bookstores were partners not just in a student’s retail experience on campus, but were partners in their education? Chegg is following this model to great success with their Tutors, Study, and Writing Tools programs. Their results: 50% Year/Year growth in these businesses, while their traditional book business has declined over the past three years. Chegg is finding a way to refocus from a retailer to a service provider by helping students with their broader education needs. It’s all about the service of educating.

And now let’s address the cost-savings through various permutations of bulk access, all-inclusive, e-texts, etc. These programs seem to be off in some MBA-fueled optimization problem of distribution, logistics, and cost negotiation. The point they miss is that education is not just a textbook. Publishers want us to hold this view, because - yes - then they can drive all margins out of the distribution chain.

Let’s start owning the mission of colleges as a service. Not the service of selling. Not the service of driving down pricing. But the service of educating.

My company, Flamingo, has focused on ways to help colleges serve students better. Our current offerings help bookstores build strong relationships with students, loyal relationships, that bring students back to the store as an always-on resource. We believe that strong service, in the spirit of education, is what will revitalize the bookstore market.

Why selling textbooks online sucks

by Aaron Hurd, CEO and Co-Founder at Flamingo

This year you might be tempted to sell your textbooks online. After all, the prices on eBay and Amazon are more than your bookstore gives you, so why not sell your textbook there and keep all of your money?

Here’s a piece of advice from a former professional reseller: Selling online sucks. Don’t do it.

You pay a hefty price to sell online… and it’s much more than you think.

If you sell on Amazon, you pay a 15% referral fee to sell your book, plus a $1 per-item fee. You can choose to ship the item yourself or use a fulfillment service like Fulfilled by Amazon. In either case, you will end up paying at least a few dollars for boxing and shipping your books. Then you have to factor in the cost of returns, which from my experience and what I’ve read online, can typically be 10%. Add it all up and you’re paying $30 to sell a $100 textbook online. Already reselling sounds like a bad deal, but it gets worse...

Returns are almost always resolved in the customer’s favor.

When I was running my reselling business, I sold cameras on Amazon. I sold maybe two cameras before I received the inevitable return email. My heart sank. I knew that a camera that sold for $500 new was going to be returned to me and that I would have to sell it as an “open box” model for $300, at which point I was losing money. What happened next was worse. Much worse.

After almost a month of waiting for the customer to ship the camera back to Amazon, and then for Amazon to ship the camera back to me, I opened the box to find that the customer had swapped my new camera for his old, broken camera. That's right. The customer took my new DSLR camera and put his broken $50 point-and-shoot in the box.

After weeks of trying in vain to work with Amazon and get them to charge the customer for his fraudulent return, I learned the hard truth: In practice, almost all return disputes are resolved in the customer’s favor and I was out $500.

You are competing with dishonest sellers.

Have you ever bought a book online only to receive a “like new” book looked like it was used during football practice... or maybe you received an "international edition" by surprise? You’re not alone. When you sell online, you are competing against professional sellers who sell knockoff textbooks, sellers who will list damaged books as “like new”, and people selling international editions. These people can and do price aggressively, and you will be competing with these sellers on price. The end effect? Your book will either go unsold or you're going to sell it for a lot less than you expect.

What to do?

If high costs, fraudulent returns, and dishonest sellers aren't enough to show you how selling online is often a bad deal... well, best of luck.

If you want a better option, look locally to your campus bookstore. Often you can walk in and get cash for your book immediately, and if your bookstore knows they are using your book next semester, you will generally get a fair price. If you don't need cash immediately, try selling your book on a marketplace like Flamingo. You can sell to another student on your campus for free and receive buyback offers from your local bookstore on your phone.

Aaron Hurd is the CEO and co-founder of Flamingo, a marketplace app that enables students to save money on textbooks and empowers bookstores to return more money to students through buyback programs, source more used books, and reduce costs for the store and students.

What happened to buyback this year?

We heard from a number of our contacts at bookstores that buyback was slower than expected this year. Many asked, "Where did all of our books go?" We wanted to know too, so we went out and did the research. We asked a sample of college students across the United States, "What did you do with most of your textbooks at the end of the semester?" Here's what we found.