But what does this mean for the industry, competitors, and a possible IPO?
Late last week, in a press release entitled “Chegg Expands Beyond Textbook Rental Industry; New Educational Services Include Class Scheduling and Homework Help,” the textbook-rental giant discussed its expansion into other educational areas such as homework help and class selection. While many news sites simply reprinted the story, I dug deeper to look at what Chegg has done and the bigger-picture ramifications.
Let’s start with some history: In early 2010, I made a prediction (and since it never came to fruition, I’m off the hook for having to prove that I made it!). I was positive that Chegg was going to purchase a large marketplace website. To me, it made perfect sense and was a natural fit: if a rental company owned a big marketplace, the company would have access to all of the sellers and most of the inventory, essentially creating a ready-made drop-ship fulfillment model. And in some senses, this has played out, though not exactly as I envisioned. The changes manifested in the form of websites such as Alibris.com providing textbook-rental sites (and other sites as well) with access to the inventory data without the rental sites having to build (or buy) any of the infrastructure.
Based on observations and predictions, I posit that in order for Chegg to go public (the direction in which it the company is apparently headed), Chegg must address three main points:
1) How it would obtain inventory
2) How it would engage students during the school year
3) How it would handle the emergence of eTextbooks