From...

by Michelle V. Rafter

(IDG) -- When students at Stanford, UCLA and 150 other U.S. colleges head to class this semester, there's a chance they'll encounter fellow undergrads strolling around campus in pumpkin-hued jumpsuits. The orange regalia isn't the latest fashion trend. Rather, it's a ploy to talk up Big Words, a start-up that sells college textbooks online.

Bright jumpsuits are just the start of a marketing blitz that Big Words and fellow online competitors are undertaking to move to the head of the class in the $5.3 billion college textbook market. The newcomers are upsetting the status quo in the once-staid college textbook industry, where campus bookstores have historically enjoyed a de facto monopoly on the sale of class books and materials.

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Web-based newcomers such as BigWords and VarsityBooks.com appeared six months ago. They sell new and used textbooks and offer incentives like deep discounts, free shipping, rental programs and searchable course lists for selected major colleges and universities. To ingratiate themselves to college customers, online booksellers run ads in school newspapers and hire students to act as roving ambassadors – tactics that are long on cool and less expensive than traditional marketing methods.

Campus bookstores are moving aggressively to fend off the new competition. In January, bookstore management giant Follett, a $1 billion private River Grove, Ill., company that runs campus stores at 585 universities, launched its own Web store. Called eFollett.com, the site premiered with a $10 million advertising campaign that featured TV spots during the Fiesta Bowl broadcast and Saturday Night Live that urge students to "Get Out of Line." Barnes & Noble, the country's No. 2 campus bookstore manager, has launched a Web store called Textbooks.com. Barnes & Noble's name doesn't appear anywhere, presumably so college customers will perceive Textbooks.com as a hip site.

The industry's leading trade group, the National Association of Campus Stores, tested a Web-site hosting service for independent campus stores at five schools for several months and announced a widespread rollout of the program set for spring. The program, known as CourseWeb, is one of several e-commerce initiatives NACS is planning on behalf of its 3,100-store membership, which association officials admit have been slow to get the Net . "We're going through what took place in music and general trade books probably a year ago," says Larry Daniels, associate executive director of the Oberlin, Ohio, organization.

Competition has spilled from the computer screen to the campus quad. VarsityBooks.com's cofounders Eric Kuhn and Tim Levy claim they were thrown off campus at George Washington University in Washington, D.C., last fall after officials at the school's Follett-run bookstore alerted campus police. Follett representative Cliff Ewert maintains VarsityBooks.com personnel didn't have the proper permission from the school to sell on campus and were asked to leave. Kuhn admits to similar run-ins on other campuses.

"What you see is a threatened industry reacting poorly to a change in the guard," he says.

So far, it's impossible to say exactly how sales at Web-only textbook sellers are going. VarsityBooks.com won't release sales figures, but it is spending $3 million on a spring advertising campaign to boost business. San Francisco-based Big Words is also remaining tight-lipped, but the company says its customers number in the "tens of thousands."

Though not the glamorous side of the book trade, textbook sales are nevertheless a bright spot in the otherwise stagnant book market; sales grew 7.4 percent in 1997, the last year for which data is available, compared to overall industry growth of 2.4 percent, according to the Book Industry Study Group. Sales of new books account for little more than half of all textbook revenue, with the remainder split between used books and other course materials.

Not only are Web-only stores out to disintermediate campus stores, but in some cases they're working directly with publishers. In mid-January, VarsityBooks.com announced a marketing agreement with International Thomson Publishing, a $6 billion educational publisher. Under the pact, Thomson reps will recommend that professors tell students to buy through VarsityBooks.com, which offers discounts on new books of up to 40 percent.

According to Matt Johnson, the 23-year-old cofounder of Big Words, economies of scale and centralized distribution mean his company sells books for less and still realizes higher margins than brick-and-mortar bookstores.

And don't forget those orange jumpsuits. "It's a word-of-mouth business," he says. "If one student gets books, he e-mails his friends and they tell their friends. When we first put up our site we were marketing to eight schools in California. But in our first month of sales, 70 percent came from outside the state. It's the classic model."