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BISG's MIP for Higher Ed 2012 -- SHAPIRO

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BISG's MIP for Higher Ed 2012 -- SHAPIRO

  1. 1. Making Information Pay for Higher Education Publishing Gary ShapiroUnsaved Document / 4/16/2011 / 16:46 SVP Intellectual Property Follett Higher Education Group
  2. 2. Follett Higher Education Group (FHEG)  Follett Corporation Founded in 1873  Revenue: $2B+  930 Physical; 330 Virtual Stores  5M + students  400K Faculty/7M+Parents/Alumni/Fans  eFollett is the 56th Largest US ecommerce site w/13+M Unique visitors  Integrated Inventory Mgmt System  CafeScribe econtent platform (2007)  Staff: 8,000 Regular full and part-time  FSLG: Library, Educational Services; Software February 17, 2012 Page 1
  3. 3. Follett Offers Course Materials Across All Formatsand At Many Price Points Over 140,000 titles  Bundles and custom products represent  New significant share of volumeTextbooks/  25-30% new text sales are digital Digital content, monetized by a print sale FHEG Textbook Revenue – FY12 YTD  CafeScribe 2.0 launched July; contracts with all top publishers; growing catalog  Attractive option for students seeking Used to manage costsTextbooks  Generally retails for 75% of new price  Introduced in Fall 2009 with national roll-out Fall 2010 Rental  Answered market demand for low price alternative Follett provides complete coverage of the course materials business spectrum 2
  4. 4. New/Digital Course Materials by Product Type 3
  5. 5. What Do We Know? The cost of textbooks is a real issue  But hype exceeds the reality (students don’t pay full new price) Students are acquiring required materials (89%)  But not as much from traditional channels  College stores have seen a dramatic decrease in market share 79% buy some materials from college stores  42% buy at least one item online; 1/3 of all purchases online Rental has become significant in Higher Ed Channel(s) Digital content accounts for about 30% of textbook revenues, but etexts a very small share  Monetizing digital through print sales  Like publishers, Follett is making significant investments in digital and partnering with new technology providers
  6. 6. Channel Impact of Text Rental “Post-Rental” Competitiveness in a world with rental Market Share • Ability to spread inventory risk and systems investments across FHEG 900+ stores • Market intelligence allows optimized title selection (incl. eFollett) • On campus presence provides convenience advantageOff-Campus • High inventory risk (local) Store • Systems investments are substantialOnline Trad. • Without acquisition, difficult to enter rental due to lack of “title intelligence” and organizational considerations; “point of (Amazon, Half) presence” sales tax concerns • Rental options available to students keep P2P prices lowPeer-to-Peer • Rental books returned to store not available for P2P (& “didn’t buy”) • Number of students not buying should also decrease (?) • High cost to administer B2C rental program Pub Direct • (Has advantage on titles with pass codes, custom and supplementary online materials)Online Rental • Low cost, centralized model with ability to spread inventory risk(Chegg. Book Renter) • Agility to re-price quickly, focused marketing
  7. 7. Stakeholders Have Diverging Interests Students Institutions Publishers Very price focused  Concerned about affordability  Rental, Marketplaces, Tech savvy  Interested in digital OpenSource impacting Engaged with alternatives; market sales social networks differentiation  Driving digital, custom, Beginning to  Changes in financial aid direct-to-student sales accept digital distribution and institutional course materials  Need commission income relationships content  Faculty requiring fewer titles;  Want more control over using Web-based content terms/conditions Environmental Factors Poor economic climate Enrollment changes/declines (“For Profit” Institutions; Community Colleges) Competitive bidding for clients Startups/venture investments leading to significant noise; sales impact OpenSource endorsed by PIRGs, legislators Investment(s) needed to compete 6
  8. 8. Positioning to Win Against Local and OnlineCompetition Rental Publisher Stores Marketplaces Sites DirectAll text formats available(Used / New / Rental / Digital)  X Limited XAccepts all tender types(Cash, check, credit card, campus card,financial aid)  X X XOffers in-store pickup  X X XAssurance of right materials fromone place  X X XIntegrated with campus systems(LMS, SIS, registration system)  X X X Growth in financial aid as tender – a strategic advantage (% of tenders using financial aid) 35% 30%  booknow allows students to purchase all new and used textbooks and course materials at 25% time of class registration  First and only registration integration system 20% in the industry  Allows Follett to maintain and gain share in 15% an increasingly competitive environment FY08 FY09 FY10 FY11 7
  9. 9. The Majority of Sales Are From Traditional Texts 0% Traditional texts The majority of  6 major publishers dollars of sales are  One text per course traditional texts% of New Equivalent Retail $’s Transacted 20%  Significant pedagogy  2 page spreads; graphics, color; chapter exercises 40%  Highlighting and underlining; memorization 50% of retail = 3,585 titles (2.51%)  Publisher support 60%  Average Price: Over $75 80% 80% of retail = 15,066 titles (10.55%) Trade books and monographs  8,000 publishers / distributors The majority of titles are trade books and monographs  Original materials 100%  Multiple books per course 0% 10% 20% 30% 40% 50% 60%  Linear reading % of Titles  Average Price: Under $50 100% of retail = 142,762 titles (100%) Source: Internal FHEG data 8
  10. 10. Product Evolution Will Differ Based on Discipline The discipline will determine how technology will change course materials and how fast they will evolve – significant differences in Textbooks product types leads to different impact from digital Evolving into Evolving into native digital enhanced (adaptive print learning) products products Other digital components Supplementary content Homework management tools Assessment products 9
  11. 11. Product Evolution Will Differ Based on Discipline The discipline will determine how technology will change course materials and how fast they will evolve – significant differences in Textbooks product types leads to different impact from digital Evolving into Evolving into native digital enhanced (adaptive print learning) products products• Problem-based disciplines Other digital components • Theory based disciplines• Digital = Interactive • Digital = Digital replica;• Technology replaces print Supplementary content enhanced print• Solo learning • Technology enhances print• Digitization leads to better Homework management • Social learning student performance, tools • Digitization = lower cost, engagement, retention convenient access, search• Driven by publisher investment Assessment products capability, note sharing• Format = faculty decision • Format = Student Decision or Campus Requirement 10
  12. 12. Devices and applications will differ bycategoryNative Digital/Adaptive Learning Enhanced print course materials APPLICATIONS APPLICATIONS • Interactive • Highlighting, note taking and sharing • More like traditional software or web- • Links to other resources accessible content Device requirements PLATFORM  PLATFORM Large / quality display • Student uses on publisher servers (Cloud) • Cloud, download  Good connection, significant memory DEVICE REQUIREMENTS DEVICE REQUIREMENTS • Fast connection Optimal devices • Quality (larger) screen • Speedy Input (Keyboard)  Multimedia-optimized tablets OPTIMAL DEVICES • Good connection; significant memory Applications • Laptops, desktops, netbooks. OPTIMAL DEVICES  Highlighting, Laptops, desktops, netbooks • note-taking and sharing • Possibly larger format tablets  • Sophisticated tablets Links to other resources Monographs PLATFORMS Download, Cloud DEVICE REQUIREMENTS Books on reading devices Quality screen (eInk) OPTIMAL DEVICE SOLUTIONS Tablets and Readers, Smartphones, eink devices Key questions: • Does it support the unique content critical to teaching and learning? • Will students use a dedicated reading device or want a multipurpose device? • Is the device affordable for students; esp. with the additional cost of the content? 11 • Does the primary content provider support all platforms and devices?
  13. 13. Digital “Tailwinds” in Higher Ed Rise in availability and use of quality homework management, assessment tools Standards are making it easier to integrate econtent with LMS Declining print sales challenging publishers to create new models Rapid rise in tablets & smartphones Availability of digital content (& favorable pricing) Growth in distance learning/use of digital Rapid growth of ebooks in trade and professional markets February 17, 2012 Page 12
  14. 14. Digital “Headwinds” in Higher Ed Tablets not affordable option for many students Most digital content unexciting replica of printed text; extended reading on desktop/laptop is difficult for most Premium digital content selling for premium price Digital, while cheaper than new print, is more expensive than traditional (buy used/sell back) model; rental countering cost savings of digital Student access to quality bandwidth not ubiquitous Some faculty still resistant to technology  The number of classes taught by adjuncts ADA concerns February 17, 2012 Page 13
  15. 15. Channel Impact of Digital “Post-Digital” Competitiveness in a world with digital Market Share • Access to the customer becomes even more critical as publishers FHEG move toward agency pricing reducing price competition • Customer-centric systems which provide convenience (virtual), easy (incl. efollett) purchase and access are keyOff-Campus • Unlikely to survive as course materials outlets due to investments required to support digital Store • May have significant position depending on ability to be Online Trad. customer access point of choice (Amazon, Half) • However, will lose share to institutional decisions (licenses) and one-fee-like programsPeer-to-Peer • Not a legal option (& “didn’t buy”) • Potential for publishers to disintermediate all other channels, Pub Direct IF they remain the primary content providersOnline Rental • Would have to fundamentally revise business model to play in this(Chegg. Book Renter) space, and even at that unlikely to have significant customer access required for success
  16. 16. New/Digital Course Materials by Product Type 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Traditional Print Custom Text (Print) Bundles (Print + ebooks Native Digital Digital) Today 5-7 Years 15
  17. 17. FHEG is Encouraging Institutions to ThinkStrategically About Course MaterialsMitigate risks Managing number of platforms and applications adopted and used Assuring productivity increases, not decreases Faculty can teach, not provide technical support and/or have to learn to effectively use multiple technologies (from LMS to publisher platforms) Students focus on learning the material, not different but similar technologies Managing demand for bandwidth and infrastructureMinimize costs Potential new administrative and legal costs (i.e., managing licenses) Integration with technology infrastructure and supportSelling the need for strategy Choosing among options (both by students and faculty) becoming complicated Good strategy leads to improving student success while:  Optimizing their investment in course materials  Ensuring quality of instructional content  Sustaining facultys role in selecting course materials and instructional resources Student success leads to better engagement and retention Ability to capitalize on technology investments 16
  18. 18. The “Endless Aisle”
  19. 19. The “Endless Aisle”Objective: Increase revenue and wallet–share through implementation of broader inventory visibility and order management functionality – leveraging the entire enterpriseHow? Fulfill any order, any channel, from any location Centralized customer service support Increased assortment through 3rd Party Vendors Full tender availability from original store Inventory visibility across the network Centralized distribution support
  20. 20. Order Management – Product Sourcing Online Order Order Placed at Boston Management College System Proximity to Destination FHEG Distribution Center Nationwide Proximity 3rd Party Drop Ship Vendors
  21. 21. New Distribution CenterNew, 550,000 sq. ft. Distribution Center adds needed capacity to expedite “click & mortar” strategyFeaturing state-of-the-art Kiva RoboticsIncreased order put-through capability to respond to increasing demand:Further mission of driving sustainable practices
  22. 22. Not Just a Bookstore Follett’s Hammes Notre Dame Store at Eddy Commons Page 21
  23. 23. Thank you!Questions? 22

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