Online or Perish

After spending a few minutes digging through a cluttered office behind

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the bookstore at Towson University, Wayne S. Sharrer emerges with vinyl banners rolled up and tucked under his arm. Mr. Sharrer, the bookstore's director, says that back when VarsityBooks.com and BigWords.com were flooding the campus with marketing materials, he fought back with a little marketing of his own. He shakes out one banner and says with a mischievous glint in his eye, "I liked this one."

In bold letters it reads, "Apparently, you can get screwed over the Internet" above "Books on time, not online." Other banners reminded students of the long waits that they sometimes endured when ordering books online, and the hassle of returning books through the mail.

Today, though, Towson encourages students to buy books online -- from the bookstore's own Web site, that is. Towson's store, like others at colleges across the country, is making its own foray into the online world, setting up e-commerce components and Web features. For many campus bookstores, Web sites are part of a mission to cater to students who demand conveniences offered by online booksellers, as well as to serve the growing number who are enrolled in far-flung distance-education programs.

Managers of independent campus bookstores say online offerings are potentially successful, proving popular when backed up by local bricks-and-mortar counterparts, where students can easily make exchanges. Still, coordinating an online component is not always simple or economically rewarding for a college bookstore, and online sales sometimes constitute a minuscule portion of total revenue. Setting up and staffing a Web site is time-consuming, Mr. Sharrer notes. "But to keep up with the online providers, we have to do this."

The online providers that once scared campus-bookstore operators the most, BigWords and VarsityBooks, no longer show up on campus, having gone out of business or moved on to other ventures. However, students still have plenty of choices online, including Wal-Mart and Half.com. Two other booksellers, Follett and Barnes & Noble, which run many college stores across the country, have comprehensive Web sites, too.

According to the National Association of College Stores, a little more than half of the 4,019 campus bookstores in the nation are institutionally owned and operated. Ninety-eight percent of them are online to some degree, and 76 percent sell textbooks. How much business they get out of their Web sites is harder to pin down. For Towson's store, it is not much.

"It's insignificant in the whole scheme of things," Mr. Sharrer says, "but it's a service we offer." And it is a growing one: In the fall and spring semesters last year, Towson's online store processed about 200 orders; as of late August this year -- early in the fall rush -- 200 orders have already gone through. Mr. Sharrer says that although he puts the Web site's address on shopping bags and university catalogs, he hasn't really promoted the online service yet. "We want to work out the kinks first."

Meeting Student Demand

Most of Towson's online sales come from the university's distance-education or nontraditional students. A student goes to the Web site, picks out books, and enters a credit-card number. The response at the store is low-tech: Employees print out the order, pull the books off the shelves, ring them up at the register (entering the credit-card number by hand), box them up, and ship them via UPS. Towson's Web site is tied directly to the store's inventory system, but it is not yet set up to handle credit-card transactions automatically. Mr. Sharrer uses a Web product built by MBS Textbook Exchange, the book-distribution company he uses.

Mr. Sharrer says that he started setting up the Web site when VarsityBooks and BigWords were still actively marketing their sites, and students frequently asked him why his bookstore didn't offer online sales. His sales dropped about 2 percent then, while other campus bookstores saw 5-percent drops; the figures weren't alarming, but he wasn't sure if sales would continue to fall.

Such worries drove a lot of college stores online. Michael J. Kelly is the chief executive officer of Campus Hub, a company that provides Web services to college stores and is an offshoot of the Nebraska Book Company. He says his company was formed three years ago to help college stores -- and more indirectly the Nebraska Book Company -- fend off online competitors.

"We knew that the 'get out of line and get online' marketing, with the dot-com hype going on, was a real threat to the bookstores at campuses across the country," he says.

"We knew that the typical college bookstore, with a $2-million revenue, couldn't afford to compete with the tens of millions of dollars in marketing that was being invested by VarsityBooks and BigWords. So we built this technology and license it to college bookstores." More than 500 stores use Campus Hub. In August, $17-million in sales passed through the Campus Hub's sites, compared with $5-million a year earlier.

Campus Hub sets up a Web site for a college store, then charges the store a monthly maintenance fee of $250 to $850, which covers repairs, servers, and site customization.

The company has brought in additional money by selling nontraditional products, like Sprint cellphones, through the college sites; Campus Hub and the college stores split a commission from the sale of such items. Mr. Kelly says the company was started as "a service to the industry," and that the profits are slim.

New Business

For some stores, however, online business has been a boon. "Our online business has doubled every year" over the past three years, says Pamela A. Mills, the director of the bookstore at the University of Colorado at Boulder, which uses Campus Hub. She says her store now handles about 7,000 orders online every semester. Half of those orders are for books, and the other half are for university souvenirs, like caps and T-shirts.

Like many other college stores, Boulder's also offers an online book-reservation service. For a $10 fee, students can have their books picked out, boxed, and reserved for them at the store. As many as 1,500 students use the reservation service each semester.

To cover the online sales and the book-reservation service, Ms. Mills hires about five temporary employees for 10 days every semester. That costs money, but there is a payoff:

"For us it means less bodies in the store, which is a good thing," Ms. Mills says. "We have a small store compared to most schools of our size, so there are some lines. So if we can shift some business online, at the convenience of our customers, then that's a good thing."

Ms. Mills says that her store set up the online component to be competitive, especially since there is a Barnes & Noble textbook outlet just down the street. Initially, she also worried about the online competition from VarsityBooks and BigWords -- mainly because of their heavy marketing campaigns.

"We thought we were going to feel an impact, but we didn't," she says.

That's because online retailers have had a hard time surviving in the competitive textbook business. Profit margins on books are very low -- 20 to 25 percent, compared with 40 to 50 percent on other items, like clothing -- and expenses like shipping cut into that margin. Bookstores make money on a high volume of sales, most of which happen during an intense few weeks at the beginning of each semester.

But various factors can complicate business: Professors' last-minute changes to their reading lists, students who add and drop classes, and late shipments of books can all affect the bottom line.

The online booksellers were trying to navigate this difficult business in the highly competitive and hyped online market. Some students encountered problems. If students added classes at the last minute, they would have to pay extra for priority shipping, or they would get their books late. Some of the online booksellers sold used books, but it was sometimes difficult to evaluate their condition online. Online stores sometimes listed the wrong editions of the textbooks they were selling. If students needed to exchange a book, they had to go through the U.S. Postal Service.

In addition to these difficulties, some of the online bookstores were trimming low profit margins even more -- in their heyday, VarsityBooks, eCampus.com, and BigWords advertised 40-percent discounts on selected titles.

But the online book blitz didn't last. BigWords filed for bankruptcy in 2000, and little has been heard from the company since. Its Web site still works, but now it leads users to other sources for purchases. ECampus filed for bankruptcy in 2001 and was recently sold to Franklin Enterprises, its only creditor. The Web site is still up, and the business is running.

Eric Kuhn, the president of VarsityBooks, says of his company: "We've survived, and we're poised to grow."

But VarsityBooks is far different from what it was at its outset. The company started out trying to sell books to students across the country, hiring college students on dozens of campuses to market its services. But early last year it reinvented itself: Now it serves as the exclusive bookseller to about 130 private high schools and small professional institutions that wanted to get out of the bookselling business. College students can still use the VarsityBooks site, but the company no longer makes an effort to market to them.

Other online retailers are still reaching out to students, but not as energetically as VarsityBooks and BigWords did. Last year, Wal-Mart started selling textbooks on its online store, and it offers 10 percent to 40 percent discounts, even on obscure scholarly books.

Cynthia Lin, a spokeswoman for the company, says that popular textbooks, like Norton's anthologies of literature, are consistent top sellers, but she won't offer hard figures.

TextbookX.com is selling new textbooks online, but it is having more success taking a commission each time a user sells a textbook through the site.

College-store giants like Barnes & Noble and Follett have online arms in their businesses, complete with discounts. And popular book sites like Amazon.com, ABEbooks.com, and Half.com, a subsidiary of eBay, have all added textbook icons to their sites this fall; all of them offer used books for prices sometimes better than half off the list price.

But these services don't seem to worry college stores or their technology providers. Now college stores that set up online components, like the one at Brigham Young University, have their own sites to worry about.

A 'Pseudoservice'

Brigham Young offers an online book-reservation program, but for now it is only for the university's 5,000 freshmen. Picking out, organizing, and storing books for other classes would be too expensive and too difficult, says Spencer J. Hawkins, who is co-manager of the store's site. "You wouldn't think that it would be that hard, until you try it, and then it hits you that it's pretty extensive," he adds. Each reservation costs the university $11.

Mr. Hawkins and his colleague Jennifer L. Berry, the other co-manager, say that 90 percent of BYU students end up returning to the store to exchange at least some of their books. Because of that, Ms. Berry and Mr. Hawkins refer to the reservation program as a "pseudoservice."

"It looks good on paper that we offer it, because people expect us as a store to offer this, but they still end up having to come back," Ms. Berry says.

"And because they end up having to come back, you wonder, how much of a service is it really?" Mr. Hawkins adds.

Brigham Young does offer full-service online book sales and shipping, but only for distance-education students. Giving all students that option would be too costly, Ms. Berry and Mr. Hawkins say.

The university uses a program built by Sequoia Peripherals, a company that builds campus-store sites, to list class books and materials online, so students have an idea of what they will have to buy for classes. Ms. Berry and Mr. Hawkins went with Sequoia because they didn't want to sell the other products, like phone cards, that came with Campus Hub's package.

"We didn't want to be tied in with those other vendors," Ms. Berry says. "This school is a privately owned, religious institution, and we weren't guaranteed that the vendors would match our standards here or that they would always be products that we would agree with."

More Than Just Books

But stores can make money selling things other than books. Jim Zaorski, the founder and CEO of Sequoia Peripherals, says that campus stores need to pick their wares carefully; the most successful stores stick to selling textbooks and specialty items, like university-branded clothing, and don't waste their time trying to sell popular trade books and other items students can get elsewhere, usually for less money.

The specialty items can be profitable, he says.

For example, he says, the bookstore at the University of Texas at Austin sold $60,000 worth of Longhorn memorabilia online in July -- traditionally a slow month -- after the university's team won the NCAA baseball tournament in June. Of the 220 stores he serves, the Texas store, the University Co-op, is one of his most successful clients, doing some 1,500 online sales a week at some times of the year. He recently built a program that will allow store employees to call up online orders on a Palm Pilot, which streamlines the shipping process.

"They bring up the order, pick out the items, and then bring up the next order on the Palm, and the next order, and the next," he says. "They wanted this because even printing out paper was getting too slow."

And in the meantime, his company is working on a number of enhancements for the sites. For example, Sequoia is setting up a feature that will allow students to download the first few digitized chapters of a textbook if the store has run out of hard copies. Sequoia is also developing a feature that will allow alumni to make donations through the Web site.

Mr. Zaorski hopes to see more features pushed through the campus-store Web sites.

He was recently encouraged by the University Co-op, which set up a promotion to boost online sales: Scholarships for a full year will go to four lucky University of Texas students who buy their books through the Web site.

"Our customers have seen their business grow 100 percent a year every year," he says. "We know this is going to plateau, but it hasn't yet."