Flat rental sales, changing leaders: Recap of January Rush, 2011

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With the hectic back-to-school rush now over, I’ve had some time to sit back, wrap my head around the numbers, and try to make sense of everything. Hopefully, doing so will provide some perspective as to where the market is headed and what we all can expect as we get ready for the August rush. Below are my findings and some explanations based on comparisons and sales from CampusBooks.com.

Rental Increases Compared to January 2010, but Flat Compared to August 2010

The recent growth of textbook rentals is on the minds of everyone in our industry, but is the market continuing to grow? The answer is both yes and no. January 2011 compared to January 2010 shows that rentals increased in market share from 4% of revenue to 14% for a 350% growth rate. When we look at January 2011 compared to August 2010, we actually see a slight decline from 16% to 14%. 

Marketshare

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Cash-Strapped College Part 1: Before You Leave

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Next to purchasing a home, paying for college is one of the largest investments in a lifetime. Obviously, saving money is on the top of the priority list. Having wealthy parents is the first money-saving strategy. If that’s out of the question, there are still a few things you can do before, during and after your college years to save money. This is the first of a three-part weekly series, and going in logical order, will outline some strategies for both parents and students to cut costs and reduce loans before you even get on campus.

BEFORE COLLEGE

The earlier you start preparing for college the better. For parents, starting a college fund earlier rather than later is always advisable, even if you feel you can’t contribute very much to it each month. One option is a 529 savings plan, which is especially beneficial if your student is aiming for a state school. These plans  “are operated by the state government, [and] allow you to lock in future tuition costs at participating schools at today’s prices, providing a guarantee against tuition inflation” says Rachel Grumman, in her Mom’s Guide to College Savings.

 

Things like having an after school job to put money away can help too, but one of the most valuable things a student can do is learn how to budget. Learning about money goes hand in hand with earning money, and high school students who are responsible for their own expenses are often more financially responsible when they reach college.

 

Lisa Belkin, at New York Times blog Motherlode, says that “being the parent of an 18-year-old means second guessing a lot of choices made over 18 years, and one that I might have done differently is the decision not to have him get a job until the end of high school.” Her regret isn’t unique, as any parent slammed with a credit card bill or a pleading phone call can attest. Over the course of a four-year undergraduate study, the ability to budget their income and avoid expenses can save a student more than many scholarships award.

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Kindles in the hands of second-graders: E-Readers for early education

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Image courtesy of Engadget

 Since the dawn of the digital age we have been transitioning from old technologies and mediums to new ones. Today, everyone is heralding the demise of print: magazines, books and newspapers are increasingly being viewed online through computers, cell phones and tablets. Yet the textbook industry is stuck in the days of the printing press.

For years, we’ve heard reports on the rising costs of textbooks and the amount of strain that a backpack full of books can put on the spine of an 80lb 5th grader. But while slow, change is coming in the form of digital textbooks increasing their market share in higher education. According to a report by Dr. Robert Reynolds and Yevgeny Ioffe, digital texts currently account for .5% of the overall textbook market, but they will increase by 150-200% each year, reaching 18.8% by 2014.

One roadblock that has long stood in the way of digital textbooks is hardware. With the explosive popularity of netbooks, tablets and readers (the Amazon Kindle, Barnes and Noble Nook and the Apple iPad) having inexpensive eBook readers is becoming less of a concern. Take for instance the Kno tablet. The first of its kind, the Kno is a 14 inch touch screen tablet specifically designed to display digital textbooks and is being marketed to college students with the slogan “with savings of 20%-50% on textbooks, the Kno pays for itself in three terms.”

And higher education isn’t the only market. K-12 teachers across the nation are putting this technology in the hands of their younger students. At Clearwater High School, in Clearwater Florida, 2,000 students received a school-furnished Amazon Kindle preloaded with all the books they would need for the semester. Students were excited about the new technology and administrators were excited about the savings. John Just, assistant superintendent for management information systems for Pinellas County schools, said that the Kindle saved the English department so much money, it was able to fulfill its wish list, getting books like Superfreakonomics and Into the Wild.

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Debunking the Rental Myth

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College students (and their parents) find out about the high prices of textbooks the hard way. Discovering methods to save money is a steep and expensive learning curve. Increasingly, students simply go without, either because they can’t afford the books, or they chose to gamble on getting by on borrowing or reserved library texts.

For those that do try to buy, downright insulting buyback prices at most campus bookstores offer no real return on students’ textbook investments. In contrast, textbook rental sites that rent books by the semester get textbooks in hands for 20% to 50% cheaper than buying a used version, even from online retailers.

But technology has changed and online stores are increasingly offering many times more for buybacks. Are rental sites a good deal, or are students just paying for convenience?

Anyone getting a Bachelors of Science degree will likely take an entry-level biology class, even if they are going into another field.  Microbiology: An Introduction (10th edition) is an entry-level text that lists for around $170 but can be found as low as $107 new online. Used, eBay offers the book for $60 with free shipping.

Now let’s look at the rental options.  CampusBookRentals.com has the best rental price, coming in at $53.75 to rent for a 130 day semester. It’s not a lot cheaper than buying used, but savings are savings.

That is until you factor in that the $60 textbook from eBay would be yours to sell back at the end of the semester. Even a campus bookstore will likely pay you more than the $6 difference you paid to buy instead of rent.  However, if you happen to look around the web, you might find that BetterWorldBooks.com is offering $77.91 for a “good condition” used version of Microbiology: An Introduction. So, when all of the math is done, that freshman can either be out $54 on his rental book, or up $18 after selling it back online.

Just like any market, there are ebbs and flows with buyback prices as supply and demand fluctuate with the school year. These buyback prices are for the beginning of the semester, when there’s still a high demand. The savvy student will hold onto their textbooks (their assets) until demand is high again to make a profit 

So why are students renting?

Doing the research and coming out profitable (or at least in less debt) requires a long-term perspective that many students lack.  It takes more research and a little bit of number crunching, but there’s a tangible pay-off, like any good investment. If students and parents can shift their perspective and see textbooks as an investment like any other, instead of hinging on convenience and a time-crunch, they can save hundreds each year. 

  

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