Managing the inventory of a large university or college bookstore without the help of point of sale (POS) and bar code technology would be challenging to say the least. The University of Texas, for example, has 6,500 active book titles available. The actual number of books is the 6,500 book titles multiplied by the number of students needing them. With an enrollment of 50,000 students, this translates into hundreds of thousands of books. Yet many textbook managers in college bookstores still use card file systems and manual counting to track inventory. ABS Corporation, a textbook wholesaler which sells to college bookstores, saw the demand for a better solution. It developed ComTexT inventory control software in 1984 to help bookstores manage their thousands of books. ABS developed its POS software, SellMate, in 1988. Recognizing that college bookstores would benefit from the both the inventory control and POS software, ABS became a POS/AIDC (automatic identification data collection) VAR.
How Big Is The College Bookstore Market?
The college bookstore market consists of about 3,700 stores nationwide, says Count Darling, store systems director for ABS Corporation. Within the market, there are two types of college bookstores, Darling explains. One type of store operates as part of the college or university. The bookstore staff is employed by the institution. The goal of the store is to provide a service to the college students. Any profits from the store are generally used for scholarships and to benefit student activities at the school. In 1997, approximately 2/3 of all college bookstores were operated by colleges or universities.
The other type of college bookstore is a leased operation. The college or university turns control of the store over to a large corporation, usually a textbook wholesaler. Bookstore staff are employees of the corporation. The goal of a leased store is to make a profit for its parent corporation. These corporations typically use their own POS solutions. Approximately 1/3 of college bookstores were operated by corporations in 1997. There are 31 different corporations in the store leasing business. Of the 31, one company operates 45% of the leased stores.
ABS' POS customers are the college bookstores operating as part of a college or university. Its competition includes both wholesalers who do and do not lease stores and other POS VARs. Because leased stores can revert back to institutional control, the number of leased stores within the market changes. "Once a store goes to a lease system, ABS is out of that market from a POS systems standpoint," says Darling.
How The Textbook Market Works
"The process of acquiring and selling textbooks is cyclical for college bookstores," says Darling. Initially, all textbooks originate from a publisher. Bookstores order new textbooks from publishers and used textbooks from wholesalers for students to purchase. At the end of a school term, students can sell the books back to the bookstore or a wholesaler. "Bookstores prefer to use a wholesaler for book buybacks," says Darling. "The wholesaler provides the labor and equipment for the event and ships the books back to the warehouse." The bookstore, in turn, gets a percentage of the cost of the books or book credits.
The book buy-back process is automated, tying into ABS' ComTexT software. Book titles are scanned as they are bought back using handheld bar code scanners, automatically updating a store's inventory.
The Book Buying Process
To prepare for a new school term, textbook managers work approximately six months in advance. Using ABS' ComTexT inventory system, for example, textbook managers generate a form to send to instructors. On it, instructors fill out information about the numbers of students they expect and which books they will be using. The forms are then returned to the textbook manager who keys the information into the inventory system. The textbook manager then keys in an estimate of how many textbooks will be acquired during the next buyback. All of this information is compiled in the system, which creates a list of books (want list) needed by the store. Stores send the list by fax, mail, or electronically to place their orders with publishers and wholesalers. Bookstore managers' generally order a certain percentage of new books, says Darling. However, used books provide a higher margin for the bookstores and give students a price break (30% off list price). New textbooks have a margin range of 18% to 26%, while used books have a margin range of 28% to 38%.
Store Inventory Is Automatically Updated During A Book Buyback
As books are ordered from publishers, they are automatically removed from the want list. The list is then sent to a wholesaler, using Easy Link data transfer, a "poor man's EDI (electronic data interchange)," says Darling. The wholesaler's inventory system then "works the list." The computerized system compares the wholesaler's inventory with the list of books requested by the bookstore. Using the data transfer, a list of available books from the wholesaler is sent back to the bookstore. For many stores this is the same as a confirmed order, says Darling. A confirmed order automatically updates the original want list. This revised list is then sent to the next wholesaler on the manager's list, and the process begins again. Depending on how early a wholesaler receives a want list, it may have several days or only several hours to work a list, says Darling.
Students Order Books Online Using Web Sites
"Ordering books may get even easier with the addition of new technology," says Darling. Using the Internet, students can access a bookstore's Web page to locate course and textbook information.
Bookstores, using the system to its fullest extent, offer students the ability to order textbooks from the store online. "Some stores will prepackage or even deliver books to students' homes or dorms," says Darling. ABS' ability to help bookstores reach out to their customers in this way has given ABS an edge over its competition. The company is planning to expand its inventory software capabilities to include radio frequency for real-time inventory needs.
POS Opportunities In The College Bookstore Market
Because colleges vary in size, there are opportunities for POS VARs to move into the market, says Darling. Bookstores at smaller colleges (less than 4,000 students) often don't require a complex textbook management software package to track their inventory. There are more than 1,300 schools in the market with enrollments of less than 1,000 students. POS software can run independently of the textbook management program. Smaller stores may only need one or two POS terminals to manage miscellaneous items, such as textbooks, school supplies and sweatshirts.
Larger stores, like the University of Texas, require an integrated textbook management and POS system. These systems manage the entire cycle of ordering used textbooks from wholesalers and new textbooks from publishers. "Textbooks are the 'meat and potatoes' of any college bookstore's sales," says Darling. VARs do need some tie to wholesale textbooks to sell inventory systems to larger school stores, adds Darling. But, he points out that VARs looking to add to the service side of their business may want to consider this market. ABS, for example, contracts with third parties to service its hardware because its customers are located across the United States.
Making The Sale
Textbook managers want to see hardware and software demonstrated in their stores, says Darling. ABS sales representatives are on the road several times a year visiting campuses across the country. Trade shows also provide opportunities for ABS to showcase its POS and inventory software. Darling explains that textbook managers typically belong to regional associations that hold trade shows in the fall. CAMEX (College Associate of Marketing Executives) and NACS (National Association of College Stores) sponsor a large industry trade show every spring. It is not unusual, says Darling, for a private institution to purchase a POS system at the CAMEX show. However, most sales take longer. Public institutions send out RFPs (requests for proposals) and take as long as six to 12 months to make a decision. But, Darling says, this is typical. An average system combining textbook management, store management and POS functions costs between $50,000 and $80,000. This includes up to five POS stations and an additional six workstations, says Darling.