Sidewalk began renting books in-store in 2009. What seemed novel then eventually became mainstream, and we’re happy that the majority of stores today have brought some form of rental to students. We believe rental is a powerful tool to lower the cost of content, making content accessible to more students.
Rental has been an important part of Sidewalk. It has allowed us to get to know this industry and has ultimately led us to build even more products that we passionately believe address fundamental value opportunities for the college store. In-store rental has also had its downsides. Financing it has been painful. Timing and market volatility combined with too broad array of titles being returned to Sidewalk from stores, created sometimes unpredictable financial outcomes. What that has meant for our partners is unpredictability in the way we price rentals, how many titles we make available each semester, and how quickly we pay.
Although we fundamentally believe that every book available should be for rent, we’ve learned that we cannot guarantee every title ourselves because our ability to monetize many books after the rental cycle is negligible. As it turns out, Sidewalk alone is not large enough to consume the rental demand of our clients.
We pondered the problem at hand, desiring to create an outcome which aligned with our values and which would accomplish the following:
Keep rental alive in-store, in a fully managed and risk-free fashion
Provide a broader and more predictable title selection to our store partners
Provide better pricing to students
Increase the speed at which we could pay our store partners and increase our financial strength as a company
Decrease inventory risk so we can focus on software and the user experience
Bring the current textbook market dynamics to the store, not just our interpretation of it
The thinking around these desired outcomes led us to something we’re calling Cloud Rental. This is the new and sustainable way that Sidewalk is offering rentals to the market. Cloud Rental can be related to renting with rebates, but with some very important twists. For example: it remains a fully managed and risk-free program, and all rebate participants (vendors) are hidden from the store. It works like this:
Sidewalk aggregates rebate lists from industry participants. (Eventually this could even include other schools who understand their future demand.) When you upload your rental list, it prices against this cloud of rebate prices available in Cloud Rental, delivering the best rental price it can, based on rebate prices available at the time. When students return books to your store at the end of the semester, you simply keep the ones you want to keep and send the rest to Sidewalk. Sidewalk then divides the books and ships them to the individual vendors who won the titles through their rebate offer.
Your store wins because more books get priced more competitively. This happens predictably, term after term, attracting more students and growing market share. Your risk decreases since rental is a reflection of a broad set of market activity, as opposed to the needs of a single vendor (Sidewalk – or any other vendor offering a single vendor solution). Sidewalk wins because we transfer much of the cost burden onto other participants who have specific need for titles, and who have the capability to monetize titles most profitably.
Over the next few months we will be modifying our internal workings to deliver a stronger, expanded catalog for the January rental season via Cloud Rental. We’re excited about rental, as we always have been. We believe it is a core value proposition that both students and administrations have come to expect, and it is our hope that these changes increase stores’ success with rental.
To learn more about Cloud Rentals, click here.