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Wal-Mart jumps into the college textbook market – Matrix News: noteworthy people, programs, funding, and technological advances in the world of higher education – Brief Article

Al Branch

The world’s largest retailer has decided to shift some of its attention away from Joe Six-pack and onto BMOCs.

Looking for another market to conquer, Wal-Mart recently began selling college textbooks from its Web site, www.walmart.com. The company claims its College Bookstore on the site carries more than 300,000 titles and offers discounts of up to 30 percent off list prices.

The move is a bit of a curious one for Wal-Mart. On the one hand, the company’s deep pockets could spell trouble for other online textbook resellers, such as eFollett.com and eCampus.com, not to mention the traditional bricks-and-mortar college bookstores on campuses throughout the country.

Yet on the other hand, textbook retail sales generally carry very low margins. In addition, though Wal-Mart markets itself as being a good place for back-to-school shopping for all age groups–it sells lots of clothes, backpacks and school supplies–it has never tried to sell true curriculum items before.

“It’s hard to say what this could mean to the [online textbook resale] market,” says Trace Urden, an education market analyst for the investment bank W.R. Hambrecht.

Urden says there have been other companies that have tried to crack the market but failed, namely Bigwords.com, which attempted to sell textbooks at steep discounts, only to realize that it could not make money that way. Another online textbook reseller, VarsityBooks.com, also tried and failed, but instead of shutting its doors entirely, the company has moved into another facet of college marketing.

On the Wal-Mart Web site, while there were some books that carried the 30 percent discount off list price, there were many that carried only a 3 percent discount. And, though some books were listed, the site said some titles were out of stock.

“It’s a very fragmented business,” Urden says. “Granted, I wouldn’t bet against Wal-Mart because of its size and track record, but it was odd that it would be striking out on its own in this area.”

Urden added that perhaps Wal-Mart’s online business is “skewing towards college students,” as a reason why it has entered the market.

Company officials say they were simply responding to customer requests to include college textbooks on the Web site. Walmart.com has sold trade books for a few years, and it has also sold test prep guides, reference books “and books for home-schooling” for a couple of years, which helped lead to customers requesting college textbooks, according to Wal-Mart spokeswoman Cynthia Lin.

In addition, officials feel the Wal-Mart brand–which they say is among the most trusted in the retail business–is enough to lure students onto their Web site to purchase textbooks. “We want students to think of Wal-Mart for all their back-to-school needs, even college textbooks,” says John Fleming, Wal-Mart’s senior vice president of merchandising.

Since going online with textbooks in August, the company says response has been “good so far,” but Wal-Mart says it will not disclose its sales to date, nor will it disclose its projected sales for the year.

According to Lin, average textbook orders take from one to two days to reach their destinations, but can take seven days or more on occasion.

“Students have the option of returning textbooks to our stores or via mail,” Lin says, adding that the company’s supplier of textbooks is the distributor Booksamillion. “Unused textbooks can be returned up to 45 days after purchase.”

However, Wal-Mart’s stores do not carry college textbooks even though students can return them there. That’s one of the distinctions that Laura Nakoneczny, spokesperson for the National Association of College Stores, says still gives the member stores in her organization the edge. In fact, Nakoneczny says the association welcomes Walmart.com into the textbook reselling industry.

“Only about 7 percent of college textbooks are sold online each year, so it’ll be interesting to watch how well it works for Wal-Mart,” Nakoneczny says.

The overall market for college textbooks is about $7 billion annually, according to NACS. The industry is primarily dominated by Follett, Barnes & Noble and Wallace’s, that combined operate more than 1,100 of the approximately 1,400 college bookstores in the United States.

A few years ago when the college bookstores began to feel the heat from online start-ups–heat that quickly evaporated interestingly enough–they hedged their bets by not only offering students the option of buying from the stores, but also opened up Web sites to sell the same books and other merchandise.

“We surveyed students about online purchasing and 75 percent of them said they would prefer to buy textbooks from their local college bookstore’s Web site than those of other companies,” Nakoneczny says. “The primary issue for the students is trust. They know that if they have a problem, they can always go back to the bookstore.”

But, besides the association’s data and confidence within the marketplace, Nakoneczny says there remains one very simple reason why they are not worried.

“Nobody gets rich from selling textbooks. The margins are simply too low,” she says.

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