The bookstore services landscape for educational institutions, both public and private, has been radically transformed in the past five years. More and more operations have been outsourced or restructured to resemble businesses in the private sector while bookstore operations at the majority of colleges and universities still operate under a model from a time that has come and gone.
The primary reason for a bookstore’s existence—the textbook—has seen many changes, from the delivery of content (online and eBook) to the soaring rise of new textbook pricing (due in part to the increase of the used textbook market including textbook rentals) to the Higher Education Opportunity Act (HEOA), which among other policy changes allows students to become informed consumers of textbooks with the right to have ISBNs identified prior to course enrollment.
HEOA empowered students to not only shop at their local bookstore but also shop via non-traditional sources (online, used and rental) to find their course content at the lowest possible cost. Many students abandoned their local bookstores finding lower pricing off campus while giving up the opportunity to apply financial aid to their textbook purchases. And this in turn eroded the campus bookstore’s operating margins at a time when all institutions were feeling the pressure of decreased funding and budget cuts.
Traditionally bookstores were the domain of the self-operated store or contracted to nationally known bookstore operators that were an extension of their commercial operations. From a business perspective there have been many changes in the bookstore industry. There have been consolidations, spin-offs, bankruptcies, liquidations, and start-ups that higher education administrators had to consider when reviewing bookstore provider options.
Yet, when it comes to the scoping, reviewing and awarding of bookstore services it seems that the landscape has not evolved as much as other educational services on campus. Most bookstore operating contracts are awarded similarly to the process 10 years ago. Administrators either negotiate and renew with their existing provider, maintaining the status quo, or prepare an RFP for release and then evaluate with a grading rubric based on a traditional on-ground bookstore services model.
Where does that leave the bookstore and student? The bookstore continues its downward spiral of decreased revenue by supporting an operating model with high textbook margins so that they can provide sufficient commission return to the institution. And the student will continue to flee to off-campus booksellers who don’t have the artificially high markups without any commission payments due to the institution.
So, how can this cycle be broken? If higher education administrators will consider the following factors when considering, specifying and evaluating bookstore operators, the institution will win by having students return to the institution-sanctioned bookstore (physical or virtual) to purchase their textbooks. This will in turn drive additional merchandise and other purchases thus stabilizing and in most cases increasing revenue. Students can purchase reasonably priced textbooks with a choice of delivery options (new, used, rental or eBook) and with the option of applying financial aid to any textbook purchase by buying at the institution’s bookstore.
Savvy administrators are recognizing that there is a paradigm shift for bookstore services criteria, evaluation and contract negotiations. Here are a few things for administrators to consider when specifying, evaluating and awarding bookstore contracts:
Things to Consider When Specifying and Contracting for Bookstore Services:
- Long Term Contracts: Can anyone predict what any bookstore will be selling five years from now? With the gradual increase of eBook and online content delivery, physical bookstore space requirements for textbook delivery will become less and less. Yet many institutions are signing 7 to 15 year bookstore operations agreements. Don’t sign bookstore contracts longer than 5 years and consider 2-3 year contracts so that you have options for repurposing physical space.
- Commissions: Don’t sign contracts with high commissions and long term periods to finance bookstore renovations or garner high commissions. High commissions mean students will continue to abandon the bookstore and purchase off campus. Find other means (student usage fees, etc.) to fund renovation and capital improvement projects, not via textbook commissions. Consider commission fees between zero and five percent to retain and increase bookstore volume and lower textbook costs.
- Exclusivity & Online Programs: Why sign a contract with a bookstore provider to be the exclusive provider for bookstore services at all? Consider awarding multiple contracts to keep textbook prices competitive. Similarly, why have the same contract for both on-ground and online students? Most institutions see online as a way to grow student populations and revenue without the physical plant costs (including bookstore costs). An online student may rarely if at all go on campus. Doesn’t it make sense to have a bookstore operator with lower margins and commissions who pass on textbook savings for online students?
- Financial Aid: Does your bookstore operator allow a student to purchase content via any delivery method (new, used, rental or eBook) and apply financial aid and grants towards their purchase? If not, you are doing your students a disservice while also denying your institution revenue stream opportunities.
- Supply Chain: Are textbook purchases limited to the inventory of your local bookstore or the national chain operator’s inventory? Why not have a bookstore that can rapidly deliver content in a variety of formats from a national network of content providers in variety of formats. Buybacks can also be conducted anytime virtually beyond the traditional on-campus buyback periods.
- Innovative Technology: Are faculty dependent upon their publisher representatives and/or bookstore personnel to aid in the selection of course materials? Work with bookstore operators who provide self-service textbook adoption tools, open education resources and custom course packs to aid in the selection of appropriate, lower cost content.
These are a few of the points to consider the next time institutions are considering a bookstore operator and negotiating contracts. With some out-of-the-box thinking everyone involved in the process will prosper. Students will return to the institution-sanctioned bookstore for price, service and financial aid considerations. Institutions will benefit by having more satisfied customers while increasing volume and recapturing lost revenue.
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