Tag Archive: college textbooks

The Textbook Guru Roundup: March 3, 2017 Edition

Seriously busy week and one that’s been heavy on textbook-related news. Here’s what’s on my mind as I head into the weekend.

Lesser News But Still Worthy of Our Attention:

A Very Big Deal: B&N Acquires MBS

Barnes & Noble Education Acquires MBS Textbook Exchange: The Guru’s First Thoughts and a Little Background on the Deal

In less than a month of being the new Guru, I’ve already talked industry consolidation (Follett acquires Baker & Taylor) and touched upon Barnes & Noble Education’s stock woes. In today’s post about the B&N Edu $174.2 million acquisition of MBS Textbook Exchange, I combine the two.

A Bit of Background About the Deal

  1. B&N Edu and MBS have a long-standing sister-company relationship. B&N runs college bookstores and MBS does textbook fulfillment (B&N gets preferred used-book inventory). This relationship comes down to Len Riggio, who, even though now retired from B&N, holds a lot of B&N stock and is Chairman of the MBS Board and holder of 49% of MBS stock.
  2. B&N Edu is a leading campus bookstores retailer with a large physical and online presence. MBS is a leading textbook wholesaler, college-bookstore systems provider, and provider of 700+ direct school-associated online fulfillment for both colleges and K-12 institutions.

What we have in this acquisition is really just two connected, complementary companies becoming one. But what’s it all about?

In a nutshell, it’s about classic textbook vertical integration where the same company controls both the retail and wholesale market in order to drive efficiencies and reduce costs and redundancies, while also shortening the supply-to-sales chain, and empowering bookstores with tighter inventory control and pricing.

B&N has historically relied upon acquisition-and-consolidation has historically as its driving growth strategy. Since purchasing the company in 1971, B&N as guided by Riggio, has acquired bookstore chains, including:

  • Bookmasters
  • Supermart Books, which operated The Missouri Book Company (All retail stores sold to Barnes & Noble College Stores. Name changed to MBS Textbook Exchange, Inc. and company focused on textbook supply, store systems, and direct fulfillment.)
  • B. Dalton Bookseller
  • Doubleday Book Shops

B&N’s super-size retail presence was massive, and in addition to putting numerous independent bookstore out of business, it also took a toll on larger competitors:

  • Superstores: Borders — filed for Chapter 11 in 2011.
  • Mall stores: Waldenbooks — (owned by Borders) also defunct in 2011.
  • College bookstores: Follett and Nebraska — the former acquiring the latter in 2015 and then wholesaler Baker & Taylor in 2016.

The Missing Link Is Put Fully Into Place

B&N has had (and continues to have) a strong grip on retail bookselling. What they did not have prior to the acquisition of MBS was a wholesale book distribution operation. This absence, however, was not for lack of trying. In 1999, Barnes & Noble (the nation’s largest bookseller) announced its plans to buy Ingram Book Group (the nation’s largest book wholesaler). Within six months, B&N called off the $600-million deal as a result of the FTC stating intent to oppose the deal on grounds that it was “anti-competitive.”

And now B&N has finally filled that void. That B&N Edu acquired MBS Textbook Exchange less than one year after Follett acquired Baker & Taylor could not be less surprising or more timely. It is both a reaction to Follett taking ownership and control over the second-largest book supplier and an action that has been expected for decades and likely would have transpired regardless of Follett’s acquisition. Now that it’s happened, expect B&N stock to get a much-needed bump and for the B&N Edu vs. Follett fight for college bookstores to intensify.

Making Learning Materials Affordable in the Golden State

An Introduction to Our Two-Part Series About How California’s Major University Systems Have Been Tackling the High Cost of Textbooks and the Larger Issue of Learning Inequality

The last several years have seen lots of discussion and debate about the need to make textbooks more affordable in order to combat the high-cost of college that all too often leaves young people saddled with lifelong debt — or worse, which prohibits them from getting the education they need in order to live up to their academic, personal, and financial potential.

In the coming weeks, we’ll present part one of two-part series where we look at California, my home state and the home to some of the largest colleges and universities and state school systems in America, to see exactly what has become of those discussions — and the subsequent efforts and results — about the cost of learning materials and the larger questions about unequal access to education.

Stay tuned, this will be a must-read series that goes well beyond California in terms of relevance.

Barnes & Noble Education and Pearson PLC Stocks Getting Crushed

The Bad News from the Textbook Market Keeps Coming

Both Barnes & Noble Education and Pearson PLC saw double-digit drops in their stock prices recently after sales failed to meet Wall Street expectations. B&N Education (NYSE: BNED) CEO Max Roberts said that the decline was related to lower enrollment at colleges and a “softer retail environment.”
Taking a hit far worse than B&N Education, Pearson PLC (NYSE: PSO) lost 29% of its value in one day in mid-January after dramatically lowering revenue-and-profit expectations for 2017. How bad has it gotten for Pearson? Well, the folks at The Motley Fool writePearson stock is now down 66% over the past three years, and the market is showing no confidence that the company will turn itself around anytime soon” and Bloomberg’s “Pearson Forecasts Years of Textbook Gloom; to Sell Penguin” is in no way reassuring.

The Elephant in the Room

B&N Education and Pearson are really proxies for the whole textbook industry. The underlying causes of the industry malaise are rooted in two powerful trends: demographics and technology. After reaching a peak of 17.3 million students in 2010, college enrollment decreased 4% between 2010 and 2014 to 16.6 million in 2014 (according to the National Center of Education Statistics). This falling college enrollment is unprecedented, and obviously fewer students equals fewer textbook sales. Technical trends, including new business models (rentals), online sales, and digital books, further undermine the old model of new textbook sales to students through brick-and mortar-campus bookstores.

While the publishers try new tactics such as access codes and custom publishing in order to revive sales of new textbooks and shrink the used-textbook marketplace, the fact of the matter is these types of tactics only serve to alienate their customer base. Students are not stupid; they realize that algebra doesn’t change that much from year to year, so why should the textbook? The publishers would be well advised to create value-added services or pass on savings for students instead of thinking up new ways to milk students for their last dollar by inflating book prices.

The textbook industry is in the midst of some serious disruption. It will be interesting to see how it all plays out.

Protect your investment: Be wary of Textbook Thefts on the rise

Crime

For students, keeping tabs on where your cell phone is or locking up your laptop with a handy desk lock is common practice in the library. But what about your textbooks? Textbook theft is a rising concern for students across the nation. It may seem odd, but when you consider that textbook prices continue to rise (and so do sites paying money for those books), textbooks themselves are becoming high-risk items. Like the common practice of stealing and reselling bikes, stealing textbooks and selling them back to the bookstore or online retailer can turn a quick buck, and with some textbooks valued at hundreds of dollars, it is an appealing offer.

Take, for example, University of Virginia student Stephen Lambert, who in 2010 was charged with grand larceny for stealing nearly $20,000 worth of texts from the campus bookstore and reselling them on Half.com. Not to be out done, this year in Tennessee a student was arrested and now faces a class B or C felony charge for stealing approximately $60,000 worth of books and attempting to sell them to local pawn shops.

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Campus Books releases a treasure trove of Buy Back data. Now, what it means.

Report

Today is a big day: Campus Books released a cache of data from our Spring buy back period last year. This is big for a number of reasons. First, as one of the biggest price aggregators out there, we have a lot of data, and we’re sharing it with you. Second, this data can be a valuable tool for retailers and deal-seekers alike. It’s common (but often overlooked) sense when you compare it to any other investment: you wouldn’t purchase an investment looking only at purchase cost. You’d also plan for the best resale value.

The full amount of data and some notable results are available for download, so I won’t go into them here. However, the results have some important implications that go beyond just the data points.

First and foremost, students need to be vigilant about selling books in the same way they seek savings when looking to buy. The sentiment is often, “end-of-semester, get me to summer already,” but students can really benefit from doing some final homework.

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More Rental Options for the College Bookstore, New Survey Results

Report

The battle over textbook rentals is moving off line and into the campus bookstore, and the turf up for grabs includes both institutional and private stores. During our

CAMEX recap, we shared stories about Follett’s new partner program with independent bookstores, as well as a new partnership between Chegg and ICBA and one between BookRenter.com and NACS. And the trend continues with other companies following suit.

  

South Eastern Book Co. Joins Forces with CollegeBookRenter.com
SEB, through their $10-million investment in CollegeBookRenter becomes an in-store rental player catering to the needs of today’s college students by offering an online textbook rental program. SEB Rental customizes each bookstore’s rental site using the appropriate school colors and bookstore logo. Unlike its competitors that require a 7-10 day turnaround, SEB guarantees that a bookstore’s rental site will be live within three business days of the initial request. SEB provides the necessary customer support and IT assistance and even facilitates customer returns. SEB will assume any losses associated with students’ failure to return textbooks, and bookstores will collect a 10% commission on all textbooks rented through their SEB rental site. SEB Rental offers a store-reporting function and the company provides promotional materials to drive traffic to bookstores’ rental sites and help ensure their success.