Chapter 2

The Present and Future of University/College Stores

Textbook Delivery Models Are Providing a Positive Path

Introduction

In my previous blog, Chapter 1, I concluded with a rather pessimistic outlook for campus stores. Up until around the year 2000, university and college bookstores consistently generated net profits that benefited their institutions. However, the rise of the internet introduced new competition, changing the landscape for campus stores. This shift affected textbook sales, online rentals, and online buybacks, impacting both outsourced and self-operated stores—a trend that continues to the present day.

Embracing Change

We have now reached a pivotal moment of change. While adapting to change can be challenging and often uncomfortable, it is usually necessary for progress. My own experiences have taught me that, once on the other side of a transition, one often wonders why the change was not embraced sooner.

Significant textbook delivery programs are experiencing similar transformations.

Transition to Access Complete Programs

Store management and campus administrators are currently facing these changes. Even though textbook sales in stores have declined sharply, there is still a sense of comfort in the traditional model. However, now is the time to start embracing Access Complete (AC) programs.

Many concerns may arise regarding this transition: Will faculty accept it? Are prices lower? Will vendor software integrate seamlessly with campus systems? Will students adapt to the new process? The potential risk of failure from such a major change can be daunting and may seem like a threat to one's career.

Despite these reasonable concerns, I will demonstrate why these negative outcomes are very unlikely and why the campus community will benefit from the change.

The Decline and Potential Rebound of Textbook Market Share

As discussed previously, the market share of textbooks in campus stores has dropped dramatically—from over 90% to about 25% today. However, there are opportunities to reverse this trend for the better.

How Access Complete Works

Access Complete programs allow students to opt out when they register for courses, with the option available until the add/drop period ends. Typically, about 20% of students opt out in the first year, a figure that drops below 10% in the second year. Students can also choose to have their books shipped to their home or to the campus bookstore.

For self-operated stores, vendors provide staff to distribute books to students. For outsourced stores, the vendor's staff handles distribution. Digital textbooks are delivered directly to students via their LMS portal.

Under the AC agreement, once a student registers for courses, the vendor is notified and assigns the required textbooks to the student, charging the corresponding cost to the student's account. AC agreements have about a 35% reduction in textbook costs, which is a significant benefit for students.

Advantages of Access Complete Programs

One major advantage of AC programs is improved student retention. Students no longer need to spend up to two weeks at the start of the semester searching for affordable textbooks, a period critical to their academic success. Reports indicate that up to 2% of students drop out because they do not have their textbooks at the beginning of the term. AC programs guarantee that students receive their textbooks before classes start, and at a much lower cost.

Financially, the cash flow from textbook purchases goes directly to the institution. After the drop/add period, the vendor invoices the campus, which reconciles and pays the bill. This change in cash flow has a substantial impact on textbook revenue for the institution.

Operational Comparison: Traditional vs. Access Complete Models

Before detailing the financial impact, let's compare the current textbook model with Access Complete (AC), highlighting differences in red:

• Textbooks are shipped to the store, incurring approximately 2% freight costs both inbound and outbound. (AC) Other than the bundled orders students request for pickup, no textbooks are stored in the bookstore.
• Some textbooks cannot be returned due to publisher restrictions or missed return dates, resulting in a 100% write-off. (AC) No open textbooks are shipped to the store, eliminating returns and write-offs.
• Additional staff are required for receiving, selling, and returning textbooks, unless unsold inventory is sold to wholesalers at a loss. (AC) There is no longer a need for extra personnel during rush periods.
• Textbooks occupy at least 25% of store square footage. (AC) Except for space needed to distribute bundled orders, no textbook storage is required.
• Textbook staff typically receive year-round salaries and benefits. (AC) Textbook-specific staff are no longer needed.
• Despite operational costs, textbooks traditionally provided most store profits. However, with market share now reduced to 25% and expenses not decreasing accordingly, the profit advantage has disappeared.

Financial Impact of Access Complete

With Access Complete, the institution has no operating expenses, regardless of whether the store is self-operated or outsourced, and retains a commission thanks to the new cash flow arrangement. This change can be highly beneficial. Unlike the traditional model, where vendor commissions affect gross profit, AC allows the institution to set its own commission and add it to the vendor's cost to determine the student price, giving the university or college greater control over net revenue from textbook sales.

Addressing Pushbacks and Concerns

The most common pushback is concern that faculty will not accept the Access Complete program. This may stem from confusing AC with Inclusive Access, where colleges make direct agreements with publishers for certain titles and courses. With AC, faculty retain full freedom to select any titles they wish, and the textbook vendor will provide them, so there is no negative impact on faculty choice.

Students may question potential savings, which contributes to the initial 20% opt-out rate. However, by the second year, many who opted out recognized the cost and convenience benefits, reducing the opt-out rate to below 10%.

Calculating the Financial Benefits

To illustrate the financial impact, consider the following example using credit hours:

With the traditional model, the total commission for an outsourced or self-operated store is roughly $70,000 due to the reduced market share.

Conclusion and Recommendation

Throughout my 30 years of bookstore consulting, I have consistently maintained an objective approach until gathering sufficient data. However, when it comes to Access Complete, I recommend it for every store, whether outsourced or self-operated. It is truly a win-win-win solution.

As a final note, with proper implementation, a campus of 4,000 students can earn approximately $288,000 in commission per year through Access Complete totaling $1,440,000 over a typical five-year agreement. I strongly advise engaging a bookstore consultant to ensure successful implementation. While such consulting may cost the campus about $7,500, the potential gain of $1,440,000 clearly outweighs the investment.  Don’t you agree?