Disappointing results for Fall textbook season

The fall textbook season at Xavier University is just about done. This year's numbers were 25% of last year's fall semester (that's a 25 index for those corporate types that talk like that). Of course my reaction to that was to say "time to move on to another idea, this one is dead." But that's not very entrepreneurial. Plus after reading about all this stuff about failure and how one should learn from it, I really should try to learn from this!

So I started coming up with hypotheses as to why this was happening:

Competition. First, it seems like textbooks are a hot topic nowadays. Tons of sites out there are trying to get student's attention. The latest one is Chegg, which is a textbook rental site. As an aside, back in '07 when I was conceiving NOTtheBookstore.com, I also had the idea of a textbook rental business. I chose this model because it required a lot less capital to work with. So maybe there was a lot of competition, and people weren't using my site to buy from Amazon or Half anymore.

New textbook info requirements. The government passed a law requiring a school to post required textbooks and prices at the time of registration.  Maybe this meant my site wasn't providing enough value for people to click through to, since one of the discerning features was it showed you what books you need. Now they already tell you!

Students now know to buy online. This was another value I thought the site brought, that is to tell people to buy online. When I started the site, I had no idea I could buy the same book for much cheaper online!

Finally, and I think this is probably the 80 for the 20 reason...

I didn't have any on-campus marketing presence, other than Facebook and newspaper ads. The Marketing Club and I took a break, and initially revenue was doing fine. So I concluded that it was self-sufficient. I'm thinking that conclusion has been disproven.

Some other supporting data... The drop in revenue corresponded to a drop in traffic. I haven't run the numbers yet, but by eyeballing it, it seems like the revenue per visit numbers are the same. So it's not that students came to the site and was disappointed in it. People who showed up bought something at the same rate. People also saved on average 50% off the bookstore price, which hasn't changed (in fact, I use that number in my ads). So it's not that book prices online have gone up either.

Conlcusions:

On campus marketing through the Marketing Club was essential. It's one thing to see something advertised on Facebook or in the school paper. It's another to have fellow students telling each other about it.

One opportunity for me is to put in a new "killer feature." Educating students on getting books online and having my site be their site isn't what it used to be. People already know about it. I need something to add value for the students to give them an incentive to use my site. I have some ideas, but not sure any of them are "killer." One is to provide a place for students to post tips for other students on whether the books are really needed, or cheapest places to buy the book.

Next action:

This is a no brainer. Get back in touch with the Marketing Club. I'd like to run a focus group and test some of these conclusions with them to see if I'm right.

Any thoughts? Suggestions?

Disappointing results for Fall textbook season

Lessons from The Office

On a recent series of The Office episodes, Michael Scott, the main character, decides to quit the Dunder Mifflin Paper Company and start his own company, the Michael Scott Paper Company. In a Jerry McGuire-esque scene, he asks who's going with him... and Pam, the really cute administrative assistant, goes with him. This plotline lasts for maybe 2-3 episodes, and of course it's pretty ridiculous. But there are a few tidbits we can get from these episodes...

One small step for man...

The day after Michael and Pam quit, they gather at Michael's apartment. He has a nervous breakdown. So unsung hero Pam tries to help him:

"When I feel overwhelmed, I like to make a list of things to do, and then start with the easy stuff. We need to come up with one realistic thing we can do today."

Pam is employing our "one small step for man" approach, which I blogged about here.

Benefits: The supposed holy grail

A little later, it's Pam's turn to have a nervous breakdown:

"I had a job. I had benefits!"

I've always thought benefits were overrated. Then again I've never had to be without them. But can't you convert "benefits" to a monetary figure? Health insurance can be bought. It probably isn't cheap, but it can be bought. So put in a number. $1000 a month? That just means you add $1000 a month to your opportunity cost hurdle. I actually tried to get some quotes, and I found health insurance for $100 a month. It probably only covers a horrible disaster, but isn't that what insurance is for anyway?

The folly of not including your time as a cost

So Michael and company deliver their first orders of paper in a van that used to be owned by a Korean church. They get up at 4 AM to get their deliveries in on time. When they're done, they sit around the office tired but happy about their first orders. Michael then suggests they add a loft to the office. Pam suggest hiring a delivery service so she doesn't hafta wake up at 4 AM to do this work. Michael keeps on fantasizing about adding a loft.

The point here is you hafta account for your own time as a cost. Working long hours, working hard, being the hero isn't sustainable because there's only a certain number of hours in a day. Michael and Pam basically are getting paid to be delivery people instead of being business owners. If you can't afford to hire a delivery person and you hafta do it yourself, you're working in your business instead of on your business. This concept is explained really well in the book The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It.

Better have a good idea of cost structure before lowering prices

Michael ends up getting a lot of clients because he undercuts his old employer's prices. But his accountant tells him that as his company grows, he won't be profitable. Michael ends up calling his clients back and asking for more money to stay afloat. Obviously, he doesn't have much luck with it.

Michael just offered paper at really low prices... which can be a good strategy, but your cost structure has to support it. You can't just cut prices and take lower profits, because your costs will continue to grow as your sales do. Wal Mart can have lower prices because of their cost structure. They are so huge that they have all kinds of economies of scale, like being able to ship full trucks and having the power to get lower prices from their suppliers. They don't just lower prices without these things.

"Jobs are safer"

So, in a plot twist worthy of a sitcom, Dunder Mifflin wants to buy out Michael's paper company because they're losing clients. They offer him $60,000... after much celebrating Michael changes his mind and asks for their jobs back instead because "jobs are safer."

Well, jobs are safer when you aren't a true entrepreneur. Michael and Pam proved that, quitting on an impulse because they didn't like their new boss and trying to start their own paper company without testing it out first (Corporatepreneurship?) nor thinking about their business model.

Not bad content for a funny sitcom, eh?

Lessons from The Office

Perfection is enemy

One thing that prevents people from going from the "thinking about it" stage to the "doing something about it" stage is fear that their idea isn't perfect yet. Well I found a great post on the blog A Smart Bear: Startups + Marketing + Geekery blog. Moral of the story is the title: Your idea sucks, do it anyway... it's better to do something, fail, and learn about than it is to not do anything at all... sometimes you end up being wildly successful at something not directly related to what you started.

Perfection is enemy