Chegg Goes All-In on Digital

Chegg rented $213 million worth of textbooks online to students in 2014. The company recently turned that part of its business over to Ingram Content Group so it could focus on digital products.

Students will continue to be able to rent textbooks through the Chegg platform, but Ingram will be managing and shipping the physical inventory. Chegg plans to put more time, money, and effort into improving and enhancing its digital operations, which range from college admissions to internship placement.

“The rental model is where we started; the real product is what you’re seeing today,” Chegg CEO Dan Rosensweig told Fast Company. “Everything we think students want is online.”

The strategy could cost the company in the short term, since Chegg will only receive 20% on the books Ingram rents. Chegg earned $91 million last year, but projects revenues to increase to $133 million-$143 million in the next two years as more colleges and employers pay it for leads and students pay for learning materials and services.

Ingram will start taking over the physical textbook rental business for Chegg by May 1 and be running all warehousing operations by the end of the year, according to a report in Ink, Bits, & Pixels.

Apple tops Christmas Tech Gift List

College students told a Chegg survey they wanted electronic devices for Christmas and most said they preferred an Apple product. The mobile analytics firm Flurry found they most likely got what they wished for.

Flurry looked at activation statistics from Dec. 19-25 and found more people fired up an iPhone, iPad, or a new iPod than all other devices combined. Apple accounted for 51% of the new activations, with Samsung coming in a distant second with about 18% during the six-day stretch.

The iPhone 6 and 6 Plus probably helped spur the Apple dominance, according to Flurry, which reported a more than 300% increase in new activations of large-screen smartphones during Christmas week over the same period in 2013. The iPhone 6 topped the list of new devices activated and the iPhone 6 Plus was in the top five.

Flurry also found there were 2.5 times as many apps downloaded on Christmas day than in any December day leading up to the holiday. Apple iTunes and App Stores, along with the Google Play Store, were slow to respond during the Christmas-day rush because of the heavy volume.

“If Christmas is a bellwether for the year ahead, we should expect strong performance from iOS devices and a continued shift to the once-derided phablet form factor,” wrote Jarah Euston, vice president, analytics and marketing, at Flurry. “This was the year that time spent on mobile finally eclipsed TV and the data shows that we are spending this time in more apps than ever.”

Chegg Hosting Virtual Career Fairs

Online textbook-rental company Chegg launched its Career Service Center to give student users another way to locate a job. Now, it’s adding virtual career fairs to the mix.

The fairs let students and prospective employers meet online in real time on a monthly basis. United Healthcare has already participated in one of the first and Adobe is set to take part before the end of November, according to a report in eCampus News.

At the virtual career fair, students fill out profiles about themselves and the career they would like to find, while recruiters can specify the kind of employee for which they are searching. Students and recruiters then share information during an eight-minute online chat, with both asked to rate and review each other at the end of the session.

“There are two ways you can choose to follow up. Recruiters can say, ‘Yes, I’d love to follow up with this student,’ and they get a separate list of the students they liked, or they can choose to share their contact information with a student as soon as the session is over,” Carly Keller, marketing manager of career services at Chegg, told USA Today. “Then those students go into a regular phone or in-person interview after that. It’s in the hands of the recruiter.”

Chegg has to be pleased with the initial results. More than 1,500 students from across the nation signed up for a fair that focused on science, technology, engineering, and math (STEM) companies, including Adobe, Progressive, and AIG.

“There’s no way in which we would ever plan to charge a student to attend something like this,” Keller said. “The world of recruiting is that the talent teams and HR teams send money to reach out to candidates, and we are just trying to find more and more effective ways for students to have these opportunities with employers.”

Chegg Continues to Branch Out

The online textbook rental company Chegg Inc. continued its recent buying spree, paying $10 million in cash and $1 million in stocks to acquire Internships.com, according to a report in Internet Retailer. Internships.com is an online service that helps college students find and secure paid and unpaid internships.

Internships.com, which has two million registered users, will be part of the Career Center section on the Chegg website. The section helps students search for careers, build skills, and land entry-level jobs.

Chegg also acquired the online tutoring service InstaEDU for $30 million in June and bought Campus Deals, which offers mobile coupons to college students, in April. In addition, Chegg announced a deal in September to outsource products, warehousing, fulfillment, and rental returns of its inventory to Ingram Content Group so it could focus on digital initiatives.

Investors May Not 'Understand' Chegg

Not long ago, Chegg’s business model of renting textbooks was disrupting the way students acquired course materials and how college stores did business. But times change and the company’s attempts to change with the times has left some investors scratching their heads.

In an effort to keep pace with the market, Chegg acquired the student platform Cramster, an online food-ordering service Campus Special, and Zinch, an online service that tries to match a student with a college. The purchase of Campus Special cost $17 million alone, and Chegg paid $2 million in expenses during the first quarter with no revenue and a sales cycle that doesn’t begin until July.

Since going public last fall, Chegg has watched its stock price tumble from the initial offering of $12.50 per share to less than $6. The company reported a net loss of $25.8 million in the first quarter of 2014, despite a 66% increase in digital revenue to $17.8 million.

"Everything we do is designed to solve the pain points students have,” said Chegg CEO Dan Rosensweig in an interview with BuzzFeed. But he did admit that investors “may not understand our business right now.”

Chegg Launches Mobile App

Chegg has been making headlines of late, first announcing it was filing an initial public offering in hopes of raising $150 million. Now, the company is launching a mobile app that allows students to use their iOS or Android devices to access Chegg tools and content.

Students can use the app to read e-textbooks and access guided solutions, including two free ones the company plans to provide each week. Other iOS features of the app include textbook search functions by title, author, ISBN, or bar code scanner; the ability to rent or buy physical textbooks; and free e-textbook previews of all titles in the Chegg library.

The iOS version is available in the Apple App store, while the Android app is at Google Play, according to the press release.

Chegg Going Public, Issues IPO

Chegg used to be a Craigslist-type of business for selling and renting textbooks. Now, it bills itself as a “student hub” offering textbook solutions in both print and digital formats, scholarships, study tools, and a place to resell course materials.

Having grown over the years, Chegg is filing an initial public offering that it hopes will raise $150 million. The company is valued at $800 million, generated a net revenue of more than $213 million last year, and has raised nearly $200 million from investors, according to an eCampus News report.

While the company value is impressive, it’s also been piling up impressive losses such as $26 million in red ink in 2010. But the bleeding is beginning to slow with a net loss of $21 million in the first half of 2013, compared to a first-half loss of $32 million in 2012.

“What Chegg must prove to investors is that its growing revenue can be converted to profits,” wrote Alex Wilhelm in a TechCrunch post. “However, given the scale of its raise compared to its current cash position, it doesn’t appear to be in a hurry to reach the black.”

MOOC Deal Makes Low-Cost Content Available

Lost in the hoopla over massive open online courses (MOOCs) as a cost-saving alternative for higher education is the expense of course materials. Coursera and Chegg have partnered on a pilot program that will make e-textbooks available for no cost and still provide each company with the opportunity to create a revenue stream.

Students will be able to get e-textbooks, or at least required chapters, through Chegg for selected Coursera courses for free. Students won’t be able to copy or print the text and it will only be available for the length of the course.

“Many instructors have been feeling a little hampered by how they must make their courses so self-contained,” Coursera co-founder Daphne Koller told The Chronicle of Higher Education. “Even $40 for a textbook is way out of reach for some students, so instructors have had to teach in ways they are not used to. They are unable to rely on any readings outside the public domain.”

According to reports, content will be made available on the Chegg e-reader that has been embedded into the Coursera platform, making it easier for students to find the required materials. Publishers participating in the program are Cengage Learning, Macmillan Higher Education, Oxford University Press, Sage, and Wiley & Sons.

Coursera and Chegg hope to monetize the partnership by selling the textbook or an abbreviated Coursera version to students. The companies would receive a percentage of the money from the sale, similar to how both earn commissions on books sold through Amazon.

The publishers will profit from sales of the content, as well as from data collected from the e-reader versions.

“Because the free versions of the books will be read through an e-reader, we’ll also get information about usage,” said Stuart Johnson, executive editor at John Wiley & Sons. “How students use the electronic text, how they use the materials, will be tracked through software.”

Chegg Testing More Services on New Site

When Dan Rosenweig took over as Chegg’s CEO, he became certain the next big challenge facing the online textbook rental company was going to come from digital course materials.

Rosenweig invested $50 million on acquisitions he hopes will turn Chegg into a digital destination that can fill every need a college student may have, from course materials to homework help to dorm decorations. The firm began testing an enhanced Chegg.com site on June 1 that brings together all the services Chegg has purchased or created.

The new site allows students to use their Facebook credentials to login, providing Chegg with information about its users, social networks used, and where each individual goes to school. New services allow students to answer questions posed by others for free or a small fee, help high school seniors narrow their college search, or receive daily-deal offers from a subscription-based service.

The new Chegg web site is what Facebook might have become had it remained limited to universities, according to Michelle Hummel, CEO of the digital marketing agency Web Media Expert, in this article for Bloomburg Business, adding that students and educators are “looking for something other than Facebook that’s more targeted to their needs.”

Chegg Spots a Need, Changes an Industry

Chegg, the Silicon Valley textbook rental company, started as an on-campus classified service listing everything from electronics to kung fu lessons to hamster sitting. But its most popular category was buying and selling textbooks.

The company founders noticed that and decided to try an experimental rental web site offering 2,000 textbooks to its users. It proved to be such a great success that now Chegg rents millions of textbooks each year and employs 150 people.

“We had raised $3 million and we had hired a great team and we were sitting on a problem that was still unsolved,” said founder Aayush Phumbhra in this FastCompany video series called “The Pivot” which looks at decisions that helped companies turn into successes. “The cost of textbooks was still very expensive and the market was just waiting to be disrupted.”

The message should be a powerful lesson for those in the textbook industry in general and collegiate retailers in particular, according to Mark Nelson, chief information officer of the National Association of College Stores and vice president of NACS Media Solutions.

“I think the idea behind how they recognized an opportunity and unmet need provides interesting insight into the minds of entrepreneurs and the types of folks who are trying to disrupt our industry,” he said. “Whether stores like it or not, our industry is viewed as one that is ‘ripe for disruption’ and we need to learn to think like these guys.”

Book Rental Expanding Fast -- and moving into Digital

Business Insider recently interviewed Chegg CEO Dan Rosensweig who says the four year old company has services available on about 8,000 campuses and processes millions of orders a year.  Yes, the article reported 8,000 campuses. Chegg’s additional services than other their core book rental business include Student of Fortune, a Q&A homework help site, and Notehall, a class notes marketplace.  According to Rosenweig, Chegg wants to provide as much digital content to students as possible including class notes, books, and study groups.

Incidentally, Notehall ran into some legal troubles over its note taking business with some California State University students which violated campus copyright policy.  Chegg has acknowledged the policy and has agreed shut down their note taking business at specific universities effective January 1, 2012.

Finally, Kno, which spun out of Chegg, is working on e-textbooks and a related delivery platform.  Previously the company was working on a tablet type device, but subsequently withdrew that initiative.  However, this month they unveiled their "free textbook campaign" where they tend to give away one free e-textbook to every user.  A copy of their campaign ad appears below.

Chegg expands its engagement with students

In case you missed it. A couple weeks ago Chegg announced it was moving beyond books and launching a new site that also helps students to select courses and to receive homework help. The new ventures use technology that Chegg acquired last year when it purchased start-ups CourseRank and Cramster.

Many readers of this blog are probably familiar with Chegg for their book rental business which became a signficant driver for change in the business models in the higher education textbook market in recent years. The company also spun off Kno, which has been working on digital textbooks and a digital reader device.

Chegg's vision is to reach college students every day of the year. An ambitious challenge, but something stores ought to keep in mind in terms of managing their student relationships. As Chegg continues to branch out, stores should watch and learn. The company has some interesting ideas about engagement from which the industry could learn.