Confirming in part our initial report last month, Chegg has announced that it has closed a Series C funding round led by famed venture capital firm Kleiner Perkins Caufield & Byers to the tune of $25 million. The round also saw participation from Foundation Capital along with existing investors Gabriel Venture Partners and Primera Capital, who likely helped boost the round beyond the $15 million figure we were hearing about in November.
Chegg is a textbook rental startup that lets college students rent books for a fraction of the price they’d normally pay at their campus bookstores. After identifying the books they need on the website, Chegg sends students their textbooks within eight business days. Once they’re done with the books at the end of the term, students simply toss them in a pre-paid box and ship them back to Chegg. The service is available nationwide at 4,000 universities, and has reportedly saved some students as much as $650 per quarter in textbook fees.
It’s a great service and one that will likely spread like wildfire once more students realize how much money they can save. Textbooks have been notoriously overpriced on college campuses for years, and even the textbook buyback programs found at most student unions are blatant ripoffs, often paying as little as little as 15% or 20% of a book’s original price. With rates that put these programs to shame, Chegg seems like a sure winner. That is, until textbooks finally go digital and students can just throw them on their Kindles.
See all
Post
I hope they become successful or the investment would be a big loss in the pockets during this economic downturns and crisis.
all books will be online and the content traded freely than what happens?
GeniusLocator.com - get smart.
Not gonna happen. People have to research and write this content, and capable people don’t do this for free. Maybe something akin to iTunes might develop eventually, but there will always be payment for high-quality academic text.
Interesting service - but what do they do with all the old text books? Most professors require that you carry the most recent version of a textbook. Seems like they’ve got huge capital costs relative to the number of rentals you can get out of a book. So, for example, if I rent a book for an entire semester, or for an entire year - and then return it, Chegg gets the book back and may or may not be able to rent it again. KP is usually smart, so maybe there’s another angle.
A friend and I had an argument over this exact thing. While I was in college, I’d say at least 1/3 of the books I used were outdated by the time I was done with them, killing their resale value. How Chegg manages to flip a profit out of this service is the real question.
Great question. I sat down with a friend about 4 years ago and thought about doing *exactly* what Chegg is doing right now, and the problem you highlighted above was the main problem we had trying to figure out how to actually make it work.
There was another service at the time, before Chegg, that was also doing the same thing. It’s gone now… but I can’t remember what it was. anyone remember?
I books shelf life is around 3-4 years in the academic field. In that case they have that amount of time to charge rental fields on a book. If they charge a quarter of the price on a book it will take 4 years to get the full payment. If they charge a third it will take three years to get the full payment.
Even after your school bookstore doesn’t buy your book back there are still many schools that will use the book and hence the online marketplace will buy the book.
Right, but that still doesn’t *really* work.
The books that you’d really want to rent are the ones that get new editions every year or two years. If it’s a book with a 3-4 year use, you can just buy it used and/or re-sell it to your bookstore, friend, or on Amazon.
The real problem that needs to be solved is that students don’t like paying $115 for a new book they use twice and then can’t resell because everyone gets the new version each year.
If a book has a 4+ year life, it’s really not a problem. You can buy it used for 1/3rd the cost already.
Drew a comic about the computer industry I think you’ll all get a good laugh out of
http://iamanimportantman.blogspot.com
Your shameless plug is boring
8 days will be a tough one for many to swallow. These books are often purchased in person the day before class begins.
I like it
I am not sure the numbers make sense. Avg cost of a text book is over $100, rental is about $44-30 for rental. The problem is textbooks are updated so frequently, pretty much every year or two. How many semesters can a book really be good for before it’s outdated as per what a school is using, (not the information). I’m just talking out loud. I think getting into the digital textbook realm is a much better option and should be where schools and the industry should be going.
may be l will like it
(linkback) Thrive or Fail? Chegg - Textbook rentals for college students by mail [VOTE] - http://www.thriveorfail.com/f415b
I love the renting concept and i’m sure chegg will work. This is a new trend which will surely take off especially during these economic times when students can’t afford to buy the book. Another notable textbook rental site is Skoobit.com, I tried there service for the first time this semester and absolutely loved it, it saved me alot of money and it was extremely convenient. I think the problem with the textbooks being outdated every year is not true because other Universities will still use those books, so even though one campus might change the version for students, another campus is still using it, which makes the bookrental a very lucrative market sustaining the life of the books, making these rental companies able to re-rent them.
I think it’s a workable model until the E-books take over. While books are updated every couple years, not every school requires the updated version. So a $100 textbook (which Chegg should be able to purchase cheaper any way) can be rented out twice a year (per semester) for 4 years or so.
Of course, adding in wear and tear and shipping costs eats into some of that profit, but I think it’s a good idea.
Wish this was around when I was in college. Textbooks add up to so much money and this easily could cut those costs down. Should be passed on to every college student.
Good to see money is still flowing.
We love to see companies like this that can make a MAJOR impact saving people real cash when it counts the most. Awesome idea. Good luck to Chegg!
I fail to be impressed by the business model. How far out can eTextbooks be? Three years? Five? Pretty short lifespan for a business…
And while NetFlix works because shipping DVDs is cheap, books are much more costly to ship if needed ASAP (ie. student changing courses when semester begins, media mail doesn’t cut it).
hey benji…
etextbooks are a little ways away. for a number of reasons. let me rephrase that. very cheap ebooks are a ways a way!! the major college textbook publishers are hard at work trying to convince colleges to go ebook now, with the thesis that the ebook costs less, and therefore saves money to the student.
the downside is that the student doesn’t own the ebook, and can’t resell it. it’s a single rent arrangement, surrounded by DRM. the publisher’s cry is that it needs to be able to continue to make money throughout the life of the book…
but there are some rather intriguing guys in this space, some of them slowly building up the infrastructure to make this happen.
if’when any of them succeed, chegg anybody else that attempts to be the middle guy in the college book transaction will pretty much be hurting…
I wish this service was around when I was in college! It would have saved me a fortune.
I love to read so I joined Paperspine.com, like a Netflix for books. Same idea as the one above, just for regular books.
Wow… Great Idea! I wish I had this available to me while I was in school… I’m definitely passing on this site to every college student I know
best of luck Chegg team!
It’s one of those ideas that you wish you had thought of. Here’s hoping that Chegg is here to stay…even after Amazon unleashes a Kindle for textbooks.
i have quite some knowledge on this topic - i was on the board of directors for one of the largest university bookstores in the nation.
books nowadays have a very very short shelf life - some even less than 4 years. the problem with the used textbook market is that most professors are coerced into getting the brand new edition rendering the old version semi worthless (depending on the amount of differences and changes between the versions) - it IS an inconvenience most of the time to use an outdated version. outside of academia not many people are interesting in academic textbooks and their value goes DOWN.
so.. the first year a book is released.. you can buy a book at full retail.. but when you return the book to the bookstore you still get 50%+ of the value. the following term the bookstore has used books which are ~30% or more cheaper then new ones. and when you return them you still get a good value. NOW.. towards the end of the versions life is where renting might be beneficial as it will most likely not be bought back at all.. but by that time there’s more used books floating around. it’s a strange process.. and it IS mostly the publishers fault for pushing new editions out.
good luck~ and if prices are good then why not!
- as far as ebooks go.. i was against them personally but our bookstore heard positive reviews on them..perhaps once they refine the rules and the drm. or make them cheap enough that you don’t really need to “sell” them to recoup the high costs. (at the time they were only fractionally cheaper than print)
“If your book is late you will be charged a 25% late fee. If your textbook is not postmarked within one full week after the due date, you will be charged the cost of replacing the book.”
The replacement fee is often 50% higher than the Amazon price of the book.
These policies allow for even more leniency with expiring editions. You will also notice that Chegg offers to rent books by the quarter trimester and semester. This enables even faster turnaround time and value from books.
I think it’s a great idea and wish them the best. My only concern would be the used book market, which has all of the benefits of textbook rental (cheap price) without any of the problems (you can’t keep it). Then again, the used book market is probably experiencing a shortage in this economy. Congrats Chegg and KP.
Interesting concept, but what is the exit? I mean, it is not like you are going to take this public. Amazon buy out maybe?
Students do want to save money, but they don’t want to be tied down to contracts let alone rent textbooks. Students here at UCSB are using Uloop.com to sell and buy books from one another. My cousin uses them at UW.
Also textbooks are seasonal. They’re focus is too narrow. I think a company like Uloop which has a roommate finder and job finder will be more successful in an economy like we are in today.
Dave
UCSB ‘10
I have significant experience in this arena and I am shocked that KP would put any money towards this endeavor.
Textbook rentals have been attempted on college campuses for as long as textbooks have been in use, and there are simply too many inherent problems to make it successful.
The edition issue has been addressed in other comments as it relates to the number of turns on the inventory, and obsolete inventory at the end of an edition life.
What has not been addressed is the assurance to students that they will receive the correct version of the book requested by their professor in a timely manner. Sourcing & stocking correct amounts of inventory when students require them is challenging on a single campus let alone 1000’s of campuses. So fulfillment issues will be rampant.
And what is this magical due date? .. Length of term and therefore need, vary by campus.
Good luck getting a return on this investment.
I wish I had this when I went to school…oh the money it would have saved at the bookstore!
My assumption is that like any rental company they look to their late/loss fees to make the real money. I mean, realistically, what percentage of college students will truly be on time returning their texts? Especially when you consider the hassle of packing the thing up and putting it in the mail. I mean, returning videos to Blockbuster is a pain, think about having to ship something.
I would suggest using GreenTextbooks.org
Save Money, Save The Planet
GreenTextbooks.org specializes in the recycling of textbooks, DVDs, CDs. Buying used textbooks not only saves you money, but cuts down on greenhouse gases caused by the manufacturing of new textbooks.
With GreenTextbooks.org you’re not only saving trees, you are saving some green.
http://www.greentextbooks.org
Thanks I like it.^_^
i like how people are arguing how Chegg makes a profit from the book they rent out
if they didnt make a profit how are they still in business and how did they get that $25 million dollar investment with out making a profit???