Online Retailing Technology >> Surviving the Amazon Jungle
While many campus bookstores struggle to stay afloat, innovations in campus
‘etailing’ are helping others reclaim dollars from the big online
Whether they’re perusing the aisles of local mass merchants or clicking
through mammoth eCommerce sites, few activities are as enthralling for college-age
kids than shopping for CDs, books, sporting goods, you-name-it. But for Pacific
Lutheran University (WA) students with cash in their pockets or credit lines
supplied by parents, LuteWorld is now the place to spend. That’s because
university’s etailing hub that was launched in the summer of 2001 as a
simple extension of the campus bookstore—is now billed as the school’s
“Campus Transaction Center.” Visitors to the site can buy anything
from books to concert tickets to school sweatshirts. Parents can purchase birthday
cakes for their kids, baked and delivered by staff at the nearest dining hall.
Alumni can make donations to specific scholarship funds or buy seats for dinner
at Homecoming. Students can even add money to the debit strip on their ID cards,
giving themselves cash for things like laundry, vending, snacks and meals, printing,
and bookstore purchases.
Vendors are testing technologies that will let campus
bookstores track students’ online purchases, and
send customized e-mail promotions to them.
“There’s really nothing our students and affiliates can’t
accomplish on our site,” says Mark Mulder, director of auxiliary services
at the 3,400-student institution. “We knew the bookstore was one way for
someone to connect with the school and purchase a product, so we sat down and
asked ourselves, ‘Why not provide other ways, too?’”
That question seems to be on other minds these days, as schools expand etailing
efforts. Once a back-burner offering to ensure students wouldn’t go elsewhere
to buy their books and school supplies, eCommerce sites are slowly but surely
becoming destinations in and of themselves; transaction centers where everyone—students,
faculty, staff, alumni, even the general public—can connect with a school
And while a handful of schools are building and managing etailing efforts themselves,
a far greater number are turning to vendors such as Sequoia Retail Systems (www.sequoiars.com)
and Nebraska Book Company (www.nebook.com),
which specialize in Point of Sale (POS) and etailing services targeted at off-the-shelf
solutions looking to rebrand the functionality. Most of these solutions are
delivered on a managed services basis, meaning that the school d'esn’t
purchase the software, but instead uses Managed Service Provider (MSP) vendors
who “host” the applications. These vendors handle everything from
management to maintenance, and charge schools a monthly subscription fee, eliminating
the need for institutions to worry about expensive implementations of any kind.
In short, there are now dozens of ways for colleges and universities to blow
out their etailing strategies. Lauren Freedman, president of the E-tailing Group
www.e-tailing.com), a Chicago-based
consulting firm that helps vendors establish eCommerce sites, probably sums
it up best:
“It’s no secret that for students more so than for the rest of us,
the Internet is a huge part of life,” she says. “Enabling more shopping
online simply makes sense, and people are finally starting to pay attention
to that reality.”
Truth is, etailing has been around since the early ’90s, and came of age
as a legitimate form of commerce with the Big Bang—better known as the
bookstore behemoth Amazon.com. Under the entrepreneurial guidance of CEO Jeff
Bezos, “Earth’s Biggest Bookstore” stocked its Seattle warehouse
shelves with more titles than the Library of Congress, shipping books within
24 hours of order. In many cases, Amazon’s 20 to 30 percent discount drove
book prices down to the point where, even after shipping, they were cheaper
than the same books at the local Borders (now an Amazon affiliate) or Barnes
& Noble. Students caught on fast, and logged on to purchase their textbooks
and course materials there. In response, Borders and B&N launched their
While no national organization at the time charted how much money college students
were spending at online bookstores in particular, a 2000 study by eCommerce
market research firm Harris Interactive (www.harrisinteractive.com)
indicated that US residents between the ages of 18 and 24 were spending almost
$4 billion online per year on all kinds of goods. Given these figures, it came
as no surprise when college bookstores began to see book sales sag and revenues
drop accordingly. We all know what happened next: Bookstore managers resolved
to fight back, and many rushed to establish an etailing presence to complement
the brick-and-mortar facility, and afford students the convenience of purchasing
their books online.
“While these bookstores saw the need to establish etailing sites, many
realized that they couldn’t do away with their facilities and become Amazon
clones,” says David Rood, director of Media Services at the National Association
of College Auxiliary Services (www.nacas.org).
“They had to find a middle ground, and they struggled to do it.”
Then, just as bookstores began to get the online bookselling thing down, Amazon
morphed into Earth’s biggest everything store, peddling a panoply of products
from clothes and electronics to home furnishings and toys. Dozens of other eCommerce
sites sprouted, too, and campus bookstore managers were forced to change their
eCommerce plans yet again. As we all remember, the transformation was much more
difficult; online bookstores now faced the challenge of adding dozens of products,
including school merchandise, basic school supplies (notebooks, pens, etc.),
and more. To do this, most schools turned to higher education technology vendors
such as Sequoia, Nebraska, and Missouri Book Systems (www.mbsbooks.com)
for turnkey solutions that enabled them to put their entire physical inventories
At first, these solutions required bookstore employees to manually key in orders
at the close of each business day. But by late 2002, these same vendors had
developed etailing order systems that sync’d with customer POS systems
on the fly, enabling bookstores to offer thousands of SKUs online and track
movement of those SKUs in real time, just seconds after items were purchased.
Nebraska was first to market with its all-inclusive CampusHub eCommerce solution,
and Sequoia and Missouri followed suit soon after.
As these dynamic etailing ordering systems became available to higher ed bookstore
retailers on a widespread scale, collegiate interest in the technology took
off. Statistics from the big three POS vendors in the space indicate that more
than 1,000 colleges and universities in the US and Canada signed up for etailing
services between 2002 and 2003, and officials at the companies report that hundreds
more have signed up since. Today, while most campus bookstore managers say their
etailing sites comprise no more than 10 to 15 percent of overall sales, nearly
all of the managers say they couldn’t imagine running the business without
offering campus shoppers the option to buy online. What’s more, the numbers
are growing: Bookstore managers have predicted that by 2005 (mere months away),
more than 20 percent of sales will occur online.
Says Laura Nakoneczny for the National Association of College Stores (www.nacs.org),
“These days, etailing is simply a business necessity.”
A recent study by IT analyst firm Jupiter Research (www.jupiter.com)
indicates that between 2003 and 2007, college students will spend over $20 billion
online. With such estimates, no wonder etailing efforts at many schools have
become a priority. At PLU, for instance, Mulder says LuteWorld “rules”
campus life, overseeing every transaction that comes across the campus transom.
With the help of Sequoia, he recently launched a service that integrates the
SCT Banner (www.sct.com) registrar’s
database with the bookstore’s POS System (from Sequoia), enabling students
to log on to the system, check their course schedules, and—right at that
juncture—purchase all of the new or used books they need. The school charges
$1 to $4 in service fees for every transaction, nominal to the students, but
capable of generating additional thousands in revenue at a small school like
PLU (additional hundreds of thousands across a state system).
Sequoia has implemented the same service at the University of Texas
in Austin, where book sales are so voluminous that the bookstore has to rent
trailers to help store inventory at the beginning of every quarter. A similar
service also exists at Duke University (NC), where students
can order all of their books online, then head down to the campus bookstore
where employees have already picked and bagged the books, and are waiting to
expedite checkout. Duke also offers a delivery service (campus store employees
cart books directly to students’ dorm rooms). Brian Buttram, associate
director of Duke Stores, says that while he d'esn’t expect this new service
to replace walk-in traffic, he d'es anticipate that as many as 30 to 40 percent
of all textbook orders could eventually be filled this way—coincidentally,
a good solution for a campus with tight parking, like Duke.
But Buttram emphasizes that online book sales aren’t nearly as lucrative
as online sales of other merchandise, and notes that in any given year, his
online store can make “millions” on Duke Basketball paraphernalia
alone. At the University of Wyoming in Laramie, Manager Peggy
Falgien concurs: Sweatshirts and other hard and soft goods produce the biggest
ROI online, hands down. Falgien’s bookstore uses the Prism solution from
Nebraska Book to handle its etailing efforts, and doles out a monthly fee of
a few hundred dollars for services that include online inventory management,
accounting, and the eCommerce engine itself. She adds that the online store
has attracted dozens of customers that the physical bookstore never would have;
in fact, a majority of her soft goods customers are online surfers
from the Eastern US who want the UW sweatshirts and hats for their collections.
Terry Pepperdine, general merchandise buyer for the bookstore at Butte
College (CA), reports similar results with the same Prism system. In
the past, before Butte invested in etailing of any kind, Pepperdine says the
bookstore dispatched trucks with books and merchandise to open up satellite
locations on some of the college’s remote campuses. Now, the junior college
has curtailed satellite selling, instead requiring all remote students to buy
their books online, saving the school thousands of dollars in overhead. To generate
additional revenue during their twice-annual online sales events, Pepperdine
has programmed the Prism system to automatically push certain merchandise like
sweatshirts and T-shirts as add-ons with every purchase. Generally, Pepperdine
reveals, the suggestive selling works.
Judging from the variety of things PLU students can buy on LuteWorld, there’s
no limit to what institutions can now sell online. At Cornell University
(NY), campus officials have resisted selling books online (see box, left), but
have invested millions in a proprietary etailing site (www.store.cornell.edu/tc)
that they designed for the sale of computers and general merchandise. The site
was actually designed to help students buy their computers and related hardware,
but also serves faculty and staff. According to Kevin Drake, assistant director
of Technology and Digital Services for Cornell Business Services, the site replaced
a print catalog that his department published three times a year to keep up
with fluctuating computer prices. Now, he says, the school can adjust prices
as vendor prices change, and instant ordering has freed up technicians to spend
their time building machines instead of taking orders over the phone.
And at the Georgia Institute of Technology in Atlanta, students
can log on to a special Web site (www.parking.gatech.edu)
and, from the comfort of their own rooms, purchase annual parking passes. At
the University of British Columbia in Vancouver, campus store
director Debbie Harvie describes a new section of The Outpost (http://www.ams.ubc.ca/businesses/outpost),
where customers can purchase pendants and necklaces customized with the school
logo. Finally, at Syracuse University (NY), bookstore officials
recently developed a grocery delivery service that lets students order food
and toiletries along with their books; orders can then be delivered to dorm
rooms for a nominal delivery fee.
“Once a school invests in setting up an etailing site of any kind, there’s
not much additional cost in adding items to the list of things they can sell,”
says Mike Kelly, senior VP of Nebraska Book Company.
Partnering for Dollars
To foster creativity in adding items to the mix, some leading etailing technology
companies have partnered with nationwide vendors to enable academic customers
to offer a virtual treasure trove of merchandise. Earlier this year, for instance,
Nebraska Book inked a deal with Internet superstore Buy.com whereby students
at any of the software company’s client-school etailing sites can purchase
DVDs, CDs, and electronic equipment from Buy.com without leaving their campus
bookstore sites. Under this agreement, a bookstore site is linked transparently
to the Buy.com site, and the purchaser still thinks he or she is on the school
bookstore site. When a purchase is completed, everybody profits: Buy.com makes
its sale, Nebraska gets a finder’s fee, and the school earns a commission
of anywhere from 1 to 10 percent.
Other vendors boast different types of partnerships with the same goal—increased
access to products—in mind. With the help of eFollett (www.efollett.com),
the online division of Follett Higher Education Group, more than 675 participating
bookstores are tied behind the scenes to the same textbook database, giving
users the impression that every bookstore boasts more than 1.2 million titles.
In particular, the company has partnered with a variety of medical and eBook
publishers, facilitating access to even more of these titles than Amazon boasts.
Jill Blackstone, Internet Operations manager for eFollett, says the ultimate
result is variety for the book-purchasing customer.
“College and university customers have told us this is what they’re
looking for,” she says, pointing to the University of Notre Dame
(IN) as a particularly impressive site partnership. “Etailing enables
schools to go beyond the walls of brick-and-mortar and delve into [adventurous]
While such partnerships will inevitably become more common in campus etailing,
some vendors and schools are blazing trails with technologies and strategies
geared toward generating even more revenue. On the vendor side, both
Missouri Book Systems and Nebraska Book Company are now testing technologies
that will enable campus bookstores to track the purchases students make, and
then send e-mail advertisements or promotions to those students, based upon
those purchases. This model, similar to a form of marketing developed by Amazon.com,
is designed to hook customers on “impulse buys,” or purchases they
aren’t necessarily planning to make. The results could be impressive:
Amazon d'esn’t release statistics on its success with the method, but
some analysts estimate this type of customized marketing could add at least
5 to 10 percent in revenue annually.
There are other new technologies as well. Sequoia (the firm behind LuteWorld)
recently unveiled “Campus Concierge,” through which customers can
purchase and print out tickets (with an integrated service charge) for any number
A registration engine also allows community customers to pay and
sign an electronic waiver for things like summer camp. In addition, the vendor
has developed etailing software for handheld devices, enabling representatives
from campus bookstores to sell merchandise while working the aisles of a baseball
game, or to buy back books at the end of a semester from any corner of the campus.
The software, WirelessPartner, is available now, and is currently in use at
schools such as Duke.
On the academic side, some schools expect to develop new etailing capabilities
of their own. At San Jose State University (CA), for instance,
technologists are working to incorporate real-time sandwich ordering into a
dormitory Intranet, enabling residents of one particular dorm to order and pay
for sandwiches over the Internet from their rooms, then pick them up in the
dorm lobby. And at PLU, Mark Mulder recently unveiled a gift card program that
directs parents to LuteWorld to purchase gift certificates for their student
children, for either the online or the brick-and-mortar store. According to
Mulder, students will be able to “recharge” the gift cards by selling
used books back to the bookstore at semester’s end.
“If a student sells back $100 worth of books, we’ll give him $105
or $110 on the card,” he explains. “Might we lose that money? Of
course. But putting the extra dollars into purchasing through the bookstore
means that the student is more likely to spend more money with us, instead of
down the street.”
PLU is also innovating in the area of cross-promotions; through initiatives
like its “Send-A-Smile” gift program, the school is tying together
the resources of multiple departments to create profit opportunities campuswide.
Under the program, parents can log onto LuteWorld and send their children birthday
cakes, balloon bouquets, or giant smiley-face cookies. The initial fee for the
service is collected by the bookstore, but is shared with the school’s
dining services department.
Elsewhere, schools such as the University of Indiana have
launched cross-promotional programs that tie the local etailing efforts to the
Alumni Relations and Development offices, providing visitors with direct opportunities
to donate to scholarships or the school’s annual fund. Every time a shopper
purchases an item over a certain dollar amount, she is asked to add a donation
(donor determines target of donation) to her order. Down the road, experts predict
soliciting donations could become a highly effective application of etailing—that
is, for institutions that invest time and energy in establishing such interdepartmental
Says Rood at NACAS, “Even if a customer isn’t an alum, once you
get him onto the site to buy something, it’s 10 times easier to convince
him to donate.”
At a time when most schools strive to sell books online, Cornell University
is noticeably and actively absent.
On most college and university campuses across the country, online book sales
have become a given. At Cornell University (NY), however,
etailing efforts that focus on book sales are anathema.
Sure, Cornell sells other stuff online, such as computers, merchandise, and
tickets. The school also recently entered into a partnership with Napster
and Sony (www.sony.com),
through which students can download from an archive of 800,000 digital songs
for a minimal subscription fee. But Books? According to Margie Whiteleather,
project manager for Cornell Business Services, they just aren’t in the
plans anytime soon.
“There just hasn’t been a need for Cornell students to buy their
books online,” Whiteleather explains. “Our student population
is a resident population, and the most convenient service is for them to visually
inspect the books in our store and choose which ones they’d like.”
As Whiteleather explains, instead of investing in etailing, Cornell employs
a mix of kiosks and user-friendly bookstore design to keep students coming
to the physical store. When a student visits the store, he or she uses a kiosk
to log into the school’s registration database, access a current course
schedule and a list of books required for those courses, and print the list
out for easy shopping.
It’s not that Cornell officials don’t have the resources to invest
in an etailing site for books; they just don’t think that kind of investment
is worthwhile. Tom Romantic, director of the school’s Business Services
division, says that Cornell students simply don’t want to shop for books
online, estimating that roughly 95 percent of students still buy their books
on site at the campus store. With such encouraging numbers, he adds, why change
“We’re incredibly cautious about whether [selling books online]
is really going to provide value to us or to faculty members,” he says.
“It’s not because we’re lazy or stupid about online retailing.
I just think we’ve seen others move too boldly in this direction and
we’re trying to find a balance before we act.”
The Uphill Climb
Of course, such interdepartmental efforts require total cooperation and full
disclosure—two things that, in the collegiate environment, aren’t
always easy to come by. At Cornell, for instance, Kevin Drake and Tom Romantic,
director of Cornell Business Services, report that other departments are engaged
in etailing efforts of their own; efforts that directly compete with the campus
bookstore and actually cannibalize revenue. To wit: While the Cornell bookstore
sells campus apparel online, the school’s Athletic Department offers it
too, through an independent partnership with sports apparel maker Ivy Sport.
As a result, Romantic says, bookstore merchandise sales are stunted at best,
especially during basketball and football seasons.
Cannibalization from other departments isn’t the only challenge in the
campus etailing world; some bookstore managers warn of etailing efforts cannibalizing
their own sales in the brick-and-mortar store, as well. At Butte College, Pepperdine
estimates that he loses hundreds of dollars in on-site “impulse sales”
every day to his own Web site, where students log on to buy particular books.
They buy the books and log off—no chance to be stopped by an enticing
display. Pepperdine says some of the products that suffer most are personal
items such as pens and candy, but adds that larger items such as school T-shirts
and notebooks fall victim to the quick Web sales, too.
When pressed, however, Pepperdine reveals that his etailing goal is simply
“not to lose money.” This, of course, highlights the biggest challenge
of all: Figuring out a way to transform eCommerce from a loss-leader to a legitimate
profit source. At schools like PLU and Duke, bookstore managers have diversified
services enough to keep the effort in the black and grow it steadily. And at
the University of Wyoming, Falgien manages cost benefit another way: While much
of the merchandise in her brick-and-mortar bookstore is eventually marked down,
she has instituted a policy of no sale prices on her etailing site, ensuring
that, at the very least, she breaks even over time.
No matter how a school manages etailing, a sense of reality is paramount, say
the pundits. Even an effort like LuteWorld represents only 20 percent of total
textbook purchases, and most bookstore managers would be delighted if they garnered
as much as 10 percent of those dollars online. As technology improves, these
numbers should increase proportionally, say analysts. In the meantime, it’s
clear to most campus bookstore professionals that the Amazon approach might
not be the smartest route to profit, and that a balanced strategy that incorporates
both etailing and traditional brick-and-mortar is the best bet.
“There will come a day when etailing is everything,” says Falgien.
“Until then, finding a way to supplement the physical campus store with
targeted online sales is where I think all of us are focused.”