UNIVERSITY OF MASSACHUSETTS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW 2014
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1 UNIVERSITY OF MASSACHUSETTS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW 2014 PREPARED FOR: Mr. James Sheehan Vice Chancellor Administration and Finance University of Massachusetts Amherst PREPARED BY: Campus Bookstore Consulting Corp. DATE: January 17, 2014 UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
2 Copyright 2014 Campus Bookstore Consulting Corporation This University of Massachusetts Amherst Textbook / Course Materials Review dated January 17, 2014 has been prepared by Campus Bookstore Consulting Corporation exclusively for the University of Massachusetts Amherst and shall not be posted on the internet, distributed, copied, reprinted, or used by any person or entity other than the University of Massachusetts Amherst. UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
3 TABLE OF CONTENTS PAGE EXECUTIVE SUMMARY...4 SECTION 1: INTRODUCTION...5 1A. Overview Of Review...5 1B. Methodology...5 SECTION 2: BOOKSTORE INDUSTRY ISSUES / CHALLENGES...7 SECTION 3: COURSE MATERIALS FINANCIAL REVIEW...9 SECTION 4: VIRTUAL COURSE MATERIALS STORE- Pros And Cons...10 SECTION 5: VIRTUAL COURSE MATERIALS STORE ISSUES...13 UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
4 EXECUTIVE SUMMARY The University of Massachusetts Amherst (UMass Amherst) Administration recognizes that the business model of university bookstores is changing rapidly and has begun a proactive assessment of the textbook/course materials services provided at UMass Amherst. The goal of this assessment is to determine the most effective, efficient, and affordable method of delivering textbooks/course materials to the UMass Amherst community. As part of this assessment, the UMass Administration is evaluating whether to convert to a Virtual Course Materials Store for the delivery of textbooks/course materials to UMass Students. The traditional university bookstore model has been impacted dramatically due to the rapidly evolving textbook/course materials industry. The UMass Amherst Bookstore has been impacted by these industry changes. The UMass Amherst Bookstore s course materials financial performance has declined due to changes to the textbook/course materials business, student price resistance, intense online competition, and local competition. Textbook/course materials sales at the UMass Bookstore declined more than $2,000,000 (30.2%) between Fiscal 09 and Fiscal 13. The University will need to address the issues identified in Section 5 of this Review and determine whether cost savings to UMass Students, along with the positive image projected by providing a cutting-edge service, will be significant enough to offset the issues and transitional challenges that the University will need to undertake in order to convert to a Virtual Course Materials Store. UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
5 SECTION 1: INTRODUCTION 1A. OVERVIEW OF REVIEW 1. The University of Massachusetts Amherst has retained Campus Bookstore Consulting Corporation (CBC) to analyze the textbook/course materials business at UMass Amherst. The objectives of this Review, as defined by the UMass Amherst Administration, are as follows: To identify current university bookstore industry issues; To provide a review of the Bookstore s textbook/course materials financial performance; To identify the advantages and disadvantages of converting to a Virtual Course Materials Store for the delivery of textbooks/course materials to the University s students; and To identify issues to research and address when evaluating whether to convert to a Virtual Course Materials Store for the delivery of textbooks/course materials. 2. The UMass Amherst Bookstore operation is comprised of the following: The University Store (located in the Campus Center) The Textbook Annex The Bookstore Web site (Note: Throughout this Review, the University Store, the Textbook Annex, and the Bookstore Web site are referred to, collectively, as the Bookstore. ) 3. Under the guidance of Mr. James Sheehan, Vice Chancellor, Administration and Finance, UMass Amherst; Mr. Ken Toong, Executive Director, Auxiliary Enterprises, UMass Amherst; and Ms. Ruth Yanka, Executive Director, A & F Operations, UMass Amherst; CBC conducted a financial review of the Bookstore s textbook/course materials business during the months of November 2013 and December B. METHODOLOGY CBC used the following methodology for the Review: 1. Analysis of the Bookstore's historical textbook/course materials financial performance. The UMass Administration provided CBC with the following data and reports: Follett Bookstore Data Report for FY University Information Enrollment Report UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
6 2. Conference calls. Conference calls were held throughout the Review to discuss financial data and university issues with respect to the possibility of converting to a Virtual Course Materials Store. UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
7 SECTION 2: BOOKSTORE INDUSTRY ISSUES / CHALLENGES There has been more change in the university bookstore industry in the past two years than there was in the ten to twenty years prior. The primary driver to the changes and challenges in the university bookstore industry is the rapid evolution of the textbook/course materials business. This evolution is being driven by many factors, including the following: Significant Textbook/Course Materials Price Resistance Among Students Intense Online Competition Increased Awareness and Concern Regarding the Cost of Textbooks/Course Materials Among Faculty and Senior Administration Impact of Emerging Technology (e.g., digital textbooks, readers, tablets, integration with Learning Management Systems, Massive Open Online Courses, etc.) Blurred Distribution Channels (e.g., publishers, distributors, and wholesalers competing with bookstores through direct sales programs) These factors have impacted university bookstores in the following ways: Erosion of Textbook/Course Materials Market Share Sales Decreases Downward Gross Margin Pressure Reduced Financial Contributions Macro issues impacting the university bookstore industry include the following: Cost of Higher Education Current Economic Climate Changing Student-Learning Styles Deinstitutionalization of Learning (i.e., students are not taking all classes on campus) Changing Buying Patterns of Students Alternate Course Materials Formats These challenges have dramatically impacted the core textbook/course materials business of university bookstores. Students who were traditionally reliant on their campus bookstore to provide textbooks/course materials now have access to a variety of alternative sources and have become extremely proactive and knowledgeable in determining how to minimize the cost of their textbooks/course materials. Additional key issues and challenges in the following areas have significantly impacted university bookstore operations and the university bookstore business model: UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
8 Course Materials Pricing Policy Used Textbook Program Higher Education Opportunity Act University Bookstore Textbook Rental Programs Online Textbook Rental Programs Direct Selling By Publishers Digital Textbooks / Course Materials Emerging And Existing Technology Student Buying Habits Peer-To-Peer Sales Library Reserves Faculty Influence Open Educational Resources UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
9 SECTION 3: COURSE MATERIALS FINANCIAL REVIEW CBC reviewed and analyzed the course materials financial performance of the UMass Amherst Bookstore for the past five years. The Bookstore s Key Course Materials Financial Indicators are as follows: 1. TOTAL TEXTBOOK / COURSE MATERIALS SALES: Textbook/Course Materials Sales for Fiscal 13 were $4,669,499. Textbook/Course Materials Sales for Fiscal 13 represented 46.4% of Total Sales. Textbook/Course Materials Sales have decreased $2,021,170 (30.2%) since Fiscal 09. (Note: Textbook/Course Materials Sales for Fiscal 09 were $6,690,669.) 2. USED TEXTBOOK SALES: Used Textbook Sales for Fiscal 13 were $978,230. Used Textbook Sales have decreased $1,629,777 (62.5%) since Fiscal 09. (Note: Used Textbook Sales for Fiscal 09 were $2,608,007.) The Fiscal 13 Used Textbook Ratio (Used Textbook Sales expressed as a percentage of New & Used Textbook Sales) was 23.7%. 3. TEXTBOOK RENTAL SALES: Textbook Rental Sales for Fiscal 13 were $508,708. Textbook Rental Sales have decreased $207,545 (29.0%) since Fiscal 12. (Note: Textbook Rental Sales for Fiscal 12 were $716,253.) 4. TEXTBOOK SALES PER FTE STUDENT: Textbook Sales Per FTE Student for Fiscal 13 were $175. Textbook Sales Per FTE Student have decreased $101 (36.6%) since Fiscal 09. (Note: Textbook Sales Per FTE Student for Fiscal 09 were $276.) UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
10 SECTION 4: VIRTUAL COURSE MATERIALS STORE- PROS AND CONS The UMass Amherst Administration recognizes that the business model of university bookstores is changing rapidly and has begun a proactive assessment of the textbook/course materials services provided at UMass Amherst to determine the most effective, efficient, and affordable method of delivering textbooks/course materials to the UMass Amherst community. The Pros and Cons of a Virtual Course Materials Store are examined in this Section. PROS Competitive Textbook / Course Materials Pricing. Virtual Course Materials Store providers offer competitive textbook/course materials pricing through marketplace pricing and economies of scale due to their business model. Virtual Course Materials Store providers are not bound by the traditional textbook pricing model that most bookstore contract management firms adhere to. Reduced Textbook / Course Materials Costs. Will support the University s effort to reduce overall costs to students (i.e., fees, tuition, etc.). With the heightened visibility of the costs of higher education, the University will be making a concerted effort to reduce costs for UMass Students. Student Buying Habits / Convenient 24/7 Service. Students are tech-savvy and are increasingly purchasing textbooks/course materials online. Price is the primary factor in textbook purchasing decisions, and many students expect to be able to shop 24/7. Virtual Course Materials Store services are available 24/7 via the provider s Web site. Students can purchase course materials whenever and wherever it suits their schedule. Textbook / Course Materials Facility. Space currently allocated to the Textbook Annex can be used for other University purposes. With University space at a premium, the Textbook Annex can be utilized for other purposes that will provide value throughout the year. Currently, the Textbook Annex experiences heavy student traffic for only three weeks per semester. Multiple Textbook / Course Materials Format Options. Virtual Course Materials Store providers offer comprehensive textbook/course materials format options. These format options include new textbooks, used textbooks, rental textbooks, digital textbooks, custom course packs, etc. Comprehensive Textbook / Course Materials Services. Virtual Course Materials Store providers offer comprehensive textbook/course materials services. These services include online textbook/course materials purchasing, online buyback, returns, registration integration, financial aid transaction capabilities, campus card transaction capabilities, etc. Delivery. Textbooks/Course Materials can be delivered directly to students or to an on-campus destination, based upon the University s preference. UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
11 PROS (Continued) Shipping Savings. Virtual Course Materials Store providers periodically offer free shipping, discounted shipping, etc. As part of a Request For Proposals (RFP) process, the University can mandate favorable shipping terms and/or a centralized pickup location on campus. Adoption Services. Virtual Course Materials Store providers offer comprehensive adoption tools, allowing faculty ease of submitting adoptions and tools to assist with course materials selection. Financial Return. Virtual Course Materials Store providers will offer a financial return to the University. This includes commissions on textbook/course materials and other educational materials and supplies, and may include textbook scholarship funds. The Virtual Course Materials Store will capture a portion of the online business that the University s current Bookstore has lost; this may result in increased market share. Online Courses. Virtual Course Materials Store providers offer services to traditional students, as well as students in online or distance education programs. Technology. Students can order using any device (e.g., tablet, smart phone, PC, laptop, etc.). Dedicated Account Management. Virtual Course Materials Store providers offer dedicated account management to each institution they serve. Bookstore Industry Challenges. Virtual Course Materials Store providers will be accountable for responding to industry challenges in order to meet the needs of UMass Amherst Students, relieving the University Administration of some oversight responsibilities. The Virtual Course Materials Store providers will be expected to continually bring cutting edge course materials solutions to the University. Web Site Customization. Web sites of Virtual Course Materials Stores are customized to support University branding. UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
12 CONS Physical Textbook / Course Materials Store. There will be either a very limited Textbook/Course Materials Store, or no physical Textbook/Course Materials Store on campus. Financial Return. The Virtual Course Materials Store will generate a smaller financial return to the University than a traditional contracted bookstore operation. University Staffing Requirements. The University will need designated personnel to oversee and coordinate elements of the Virtual Course Materials Store (i.e., communicating and coordinating with the Virtual Course Materials Store provider regarding textbook/course materials adoptions). University Mail Room / Receiving Operations. There may be a significant increase in textbook/course materials deliveries to campus, impacting the University s mail room/receiving operations. Transition Costs. The University will incur transition costs, including time from University Administrators, to convert to a Virtual Course Materials Store. Faculty. Faculty may have concerns regarding the transition to a new textbooks/course materials delivery model. Student Traffic. There will be a significant loss of student traffic due to the elimination of textbooks/course materials. Students who typically visit the University Store and Textbook Annex may rely solely on online shopping. Marketing / Communication. A comprehensive marketing/communication plan will need to be implemented to ensure that all students are aware of the process for acquiring textbooks/course materials. The marketing/communication plan will need to target returning students, transfers, and incoming freshmen. Technology Requirements. Not all UMass Amherst Students have the appropriate technology to order online. Ordering kiosks may need to be made available throughout the campus to ensure that all students have convenient access to order their course materials. Special Requirements. The University will need to ensure that the business model change can accommodate the needs of disabled students (e.g., sight impaired, etc.). Delayed Delivery. Students will have to wait for textbooks/course materials to be delivered versus instant purchase in the physical Bookstore. Returns. When students drop a course or return a damaged book, the return process will not be as convenient as the traditional on-campus bookstore. UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
13 SECTION 5: VIRTUAL COURSE MATERIALS STORE ISSUES There are numerous issues that the University Administration will need to address if it proceeds with a Request For Proposals (RFP) process for a Virtual Course Materials Store. Issues include, but are not limited to, the following: 1. Program Statement: Virtual Course Materials Store RFP. If the University considers a Virtual Course Materials Store, program elements that will need to be incorporated into the RFP in order to effectively serve UMass Amherst Students include, but are not limited to, the following: Creating and implementing efficient and effective strategies to reduce the cost of textbooks/course materials to UMass Amherst Students through creative sourcing, minimizing or eliminating shipping costs, and providing a wide selection of used textbooks, textbook rental titles, and digital textbooks/course materials. Supporting the academic mission of UMass Amherst by providing efficient and effective online textbook/course materials services to students and faculty, including online buyback, online textbook rental, online digital textbooks, registration integration, etc. Providing easy access for online textbooks/course materials. Providing comprehensive textbook/course materials services to support all University academic programs. Providing excellent customer service, including minimizing delivery time for online purchases and ensuring efficient online processing of all transactions (e.g., textbook ordering, buyback, financial aid transactions, etc.). Utilizing state-of-the-art technology and emerging technologies for Web based textbook/course materials operations (e.g., online transactions, inventory status, registration integration, online buyback, etc.). 2. Distribution Channel. The textbook/course materials distribution channel is changing dramatically. Publishers now sell direct to students, and online providers of textbooks/course materials are attempting to establish relationships with other campus service providers, including libraries. The University will need to ensure that communication with respect to various stakeholders on campus includes a discussion regarding the ongoing role of the Virtual Course Materials Store and the distribution of textbooks/course materials at UMass Amherst. 3. Adoption Process. The textbook/course materials adoption process needs to be clearly defined and effectively communicated to UMass Amherst Faculty. 4. Staffing Requirements. The University will need to determine the staffing requirements to support a Virtual Course Materials Store. For example, a Faculty Liaison may be necessary in order to collect adoptions centrally, troubleshoot adoptions, ensure compliance to HEOA, etc. UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
14 5. Timeline / Transition. A detailed Timeline will need to be developed, including a Timeline for the RFP Process and a Transition Timeline for the implementation of a Virtual Course Materials Store. 6. Logistics of Shipping / Receiving and Package Pickup. A logistics plan for shipping/receiving and package pickup will need to be developed in order to ensure excellent service to UMass Amherst Students. This includes, but is not limited to, staffing, hours, pickup locations, impact to current campus shipping/receiving and mailing services, etc. 7. Return Policy. A fair and equitable return policy will need to be agreed upon and communicated effectively to UMass Amherst Students. 8. Marketing / Communication. A comprehensive marketing/communications rollout plan and ongoing marketing/communications plan will need to be developed and implemented. This includes collaboration between the University and the Virtual Course Materials Store provider and should be targeted to: Returning Students Transfer Students First-Year Students Faculty UMASS AMHERST TEXTBOOK / COURSE MATERIALS REVIEW
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