Chegg Profits Off Of Renting Textbooks

As a bibliophilic teacher who held onto nearly every book he bought for college, I can’t say I’m thrilled by the “I’d rather just rent” attitude towards the value of books required for courses.  But on the upside the students who were going to re-sell their textbooks anyway probably now save much more on each book than they were paid back at the paltry buy-back rate of bookstores.

The story:

With demand for good deals on textbooks running high, Chegg’s success comes in large part from being able to address those inefficiencies. While Chegg primarily rents books, it is also essentially acting as a kind of “market maker,” gathering books from sellers at the end of a semester and renting — or sometimes selling — them to other students at the start of a new one. That provides liquidity to the market, said Yannis Bakos, associate professor of management at the Stern School of Business at New York University.

“The model is clever,” Professor Bakos said. “If they execute well, it will be an accomplishment.”

“We benefit from the comfort zone that people have with renting things online from Netflix,” said Colin Barceloux, the co-founder of, a Chegg rival that is also based in Silicon Valley.

Alan Bradford, a senior at Arizona State University, read about Chegg in a campus newspaper in 2008 and calculated that his bill for books that semester would have been $334 with Chegg, far less than the $657 he paid. Since then, he has ordered about a dozen textbooks from Chegg.

“Nobody likes paying for textbooks,” he said.

You gotta admire this entrepreneurial nugget:

Chegg began renting books before it owned any, so when an order came in, its employees would surf the Web to find a cheap copy. They would buy the book using Mr. Rashid’s American Express card and have it shipped to the student. Eventually, Chegg automated the system.

But as the orders multiplied, Mr. Rashid said, so did the traffic on his credit card, leading American Express to suspect fraud and threaten to suspend the account. He said he persuaded American Express not only to keep the card active, but also to issue a couple of dozen more so Chegg could spread out the orders.

I imagine it won’t be long before the physical textbook—especially the literal textbook designed specifically for classes—will have gone the way of the dinosaur, replaced by internet-only resources anyway.  This does not seem like a business oriented towards the future to me.  But, then again, I have never presumed to give business advice before and should probably not start now!

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