Outcomes from 2013 CFO Survey on Textbook Delivery and Bookstore Services. Cara Dulaitis Senior Regional Sales Manager Akademos April 19, 2013

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1 Outcomes from 2013 CFO Survey on Textbook Delivery and Bookstore Services Cara Dulaitis Senior Regional Sales Manager Akademos April 19, 2013

2 About Akademos 15 years of experience PROVIDING VIRTUAL BOOKSTORE SERVICES, E-LEARNING SOLUTIONS, 3 rd Party Marketplace Sellers Over 100 million books 1.

2 2 About Akademos 15 years of experience PROVIDING VIRTUAL BOOKSTORE SERVICES, E-LEARNING SOLUTIONS, 3 rd Party Marketplace Sellers Over 100 million books 1.3 Million Members Thousands of Professional Sellers A COMPETITIVE MARKETPLACE Direct Inventory 2 Warehouses Flexible system accommodates last minute changes Rental Partners 85% core textbook availability ebook Providers Akademos ereader Publisher Direct Shipments 24 hour shipment window CONFIDENTIAL AKADEMOS

3 Million Members Thousands of Professional Sellers A COMPETITIVE MARKETPLACE Direct Inventory 2 Warehouses Flexible

3 2 The College CFO Textbook Delivery & Bookstore Services Survey The industry has dramatically shifted in the past 5 years (lost sales, internet competition, HEOA etc.) CFO survey conducted Nov-Dec 2012 Just under 300 college business administrators predominantly CFOs and equal roles participated Topics include: Bookstore revenue trends Brick-and-mortar v. online model Textbook affordability and its impact on persistence Competition from online, 3rd party providers 3

) CFO survey conducted Nov-Dec 2012 Just under 300 college business administrators predominantly CFOs and equal roles

4 2 Survey Overview 89% - CFOs who stated students are not shopping for texts at campus store 28% - Students estimated shopping elsewhere 78% - Say reason is price 56% - Textbook sales transacted with financial aid 88% - Believe textbook costs impact student retention and persistence 82% - Indicate textbook sales flat or down over the past 3 years 18% - Believe textbooks will be sold exclusively in a school online bookstore #1 most important service schools can provide students? Access to high-quality, low-cost textbooks 4

retention and persistence 82% - Indicate textbook sales flat or down over the past 3 years 18% - Believe textbooks will be sold

5 2 Revenue Trend Line Please estimate the trend line in your bookstore's textbook sales over the past three years. Flat (no change greater than 10%) 52% Down more than 10% 31% Up more than 10% 17% 0% 10% 20% 30% 40% 50% 60% 83% of respondents indicated textbook sales have been flat or down over the past three years. 5

Flat (no change greater than 10%) 52% Down more than 10% 31% Up more than 10%

6 2 Textbooks Sales Format Breakdown Approximately what percentage of your textbook sales come from the following: Custom course materials 6% ebooks 4% Rentals 14% Used books 32% New books 52% New books 52% Used books 32% Rentals 14% Custom course materials 6% ebooks 4% 6

materials 6% ebooks 4% Rentals 14% Used books 32% New books 52% New

7 2 Most Important Text Format Textbooks services CFOs rated as "very important," in order of importance: Used books 79% (rated as very important) Rentals 59% Digital/eBooks 48% Custom course materials 31% OERs (Open Educational Resource materials) 25% 7

(rated as very important) Rentals 59% Digital/eBooks 48%

2 Textbook Sales Transacted with Financial Aid Estimate what percentage of your textbook sales are transacted with financial aid: 80-100% 60-79%

8 2 Textbook Sales Transacted with Financial Aid Estimate what percentage of your textbook sales are transacted with financial aid: % 60-79% 40-59% 20-39% 0-19% Uncertain 0% 5% 10% 15% 20% 25% 30% On average, 56% of textbook sales are transacted with financial aid at respondents schools. 8

40-59% 20-39% 0-19% Uncertain 0% 5% 10% 15% 20% 25% 30% On average, 56%

9 2 Textbook Sales and Retention/Persistence How much do you think textbook costs impact retention and persistence/completion? Very much 32% Somewhat 57% Not at all 11% 0% 10% 20% 30% 40% 50% 60% 89% indicated textbook costs impact retention and persistence. 9

Very much 32% Somewhat 57% Not at all 11% 0% 10% 20% 30% 40% 50%

2 Students Buying Outside Bookstore Please estimate the percentage of your students who purchase textbooks from OUTSIDE of your bookstore: 50% or more 25-49% 1-24% 0%

10 2 Students Buying Outside Bookstore Please estimate the percentage of your students who purchase textbooks from OUTSIDE of your bookstore: 50% or more 25-49% 1-24% 0% Uncertain 0% 10% 20% 30% 40% 50% 60% 89% confirm that students are turning away from campus-based bookstores. On average, that 28% of students are shopping elsewhere. 10

Uncertain 0% 10% 20% 30% 40% 50% 60% 89% confirm that students are turning away

11 2 #1 reason students shop elsewhere? Of the following reasons, which one most represents why those students are going elsewhere? More inclined to purchase online 12% Other 6% Convenience 4% Price 79% Convenience 4% More inclined to purchase online 12% Other 6% Price 79% 11

12 2 Future Models for Textbook Delivery? In the next five years, which of the following would you agree with most regarding the textbook component of your bookstore business model. Textbooks will be sold completely in our online bookstore. 18% Textbooks will be sold in both our brick and mortar, and our online bookstore. 80% Textbooks will be sold only in our brick and mortar bookstore. 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 12

of your bookstore business model. Textbooks will be sold completely in our online bookstore.

13 2 In Summary. 28% + 29% 57% Students actually not buying texts at campus store Over half shopping through campus store are using aid The neediest students are likely paying the most What are the costs via attrition? If the #1 most important service schools can provide students is access to high-quality, low-cost textbooks, why aren t more schools executing this service? Will it be feasible to balance text pricing in brick-andmortar and online without unnecessarily inflating costs? 13

The neediest students are likely paying the most What are the costs via attrition?

14 adoption tool FACULTY CAN LOWER COSTS AT THE POINT OF ADOPTION TEXTBOOKADOPTER How can you help lower costs? EASY DIGITAL TEXTBOOK DISCOVERY BY SUBJECT TRUSTED COMPARISON OF EXISTING TEXTBOOKS ALONGSIDE OER WORKS INSTITUTIONAL ADOPTION DATA BY COURSE OR TEXTBOOK PRICING DATA AND AVAILABILITY FOR NEW, USED AND RENTAL OPTIONS DETAILED REVIEWS FROM PUBLISHERS, FACULTY, AND STUDENTS SYLLABUS MATCHING TOOLS CONFIDENTIAL AKADEMOS

com EASY DIGITAL TEXTBOOK DISCOVERY BY SUBJECT TRUSTED COMPARISON OF EXISTING TEXTBOOKS ALONGSIDE OER WORKS

15 Thank You. Questions? Comments? To keep up with trends, sign up for alerts: Cara Dulaitis Senior Regional Sales Manager

White Paper. College CFO Survey on Textbook Delivery and Bookstore Services

White Paper. College CFO Survey on Textbook Delivery and Bookstore Services White Paper 2012 2013 College CFO Survey on Textbook Delivery and Bookstore Services Presenting outcomes from our survey of CFOs on current bookstore practices and future intentions. Topics covered include