A few months ago I posted about Rent the Runway, a firm that rents high fashion dresses. While I could see the market demand for their offering, I questioned whether they could make it work operationally. Given that background, I thought it worth a few minutes thinking about Barnes & Nobles move to rent textbooks (Barnes & Noble launches text rental service, Associated Press, Jan 11). First, it seems that the market exists for such a program; other firms are already doing this and B&N has tested this at three schools and is now expanding it to twenty-five. In addition, they estimate that a college student spends $667 per year on class materials. Even if we assume that includes course packs that won’t be covered by the program, there is several hundreds on the table.
Given that, B&N’s offering could be attractive:
Barnes & Noble said books will rent for 42.5 percent of their original price, so a $100 book would cost $42.50 to rent for the entire term. Textbooks can be rented at books stores or online — with orders shipped to a campus bookstore.
Compare that to Rent the Runway. They are charging 10% of the retail price of a dress to rent it for a weekend. Even assuming that the wholesale cost is just 50% of the retail price, Rent the Runway will have to rent the dress five times or so to cover the acquisition cost. On top that, they will have to handle and clean five times. B&N, on the other hand, just needs to rent a freshman chemistry text twice to come out ahead. Further, they only have to handle it twice. It would seem that the weakness of the plan is whether B&N — and particularly their Barnes & Noble College Booksellers unit — has the expertise of picking and filling a mess of small orders that peak at the same time (e.g., the start of fall semester). I think that the answer to that has to be yes. Even when selling textbooks, they have to handle the reading lists for large lecture classes as well as small English seminars. On top of that, they have to be able to handle rush refill orders when more people than expected sign up for the English seminar. The biggest adjustment is going to be setting procedures for taking back a large number of books at the end of the term. I suspect that most of their locations have some process for buying back used books. That will need to be expanded. It sounds simple enough.
I think the real question is what pressure B&N will bring on the publishing industry now that it owns a large fleet of books. When the majority of books are bought outright, B&N’s incentives are aligned with publishers. A new edition of that freshman chem book pads the bottom line by obsoleting used copies sold by off campus stores or passed down by sorority sisters. But if B&N owns the chemistry texts, it has to replace its fleet with the new edition. One student or one professor complaining about rampant pointless updating of textbooks won’t move the industry. A firm the size of B&N, however, might.