Economic model
The first business model did not work and in 2003, the founders have shaped the company almost like Craigslist but for college campuses, where "students buy and sell all mattresses used textbooks. "The plan was to make money from advertising but their biggest seller was the textbooks used. The problem considered by most college students is that textbooks are expensive, often valued higher than $ 100 per pound, and students usually did not require heavy books after each semester, but there was no good way to sell them. An assessment was university students spent on average $ 667 annually on books in 2009. A second evaluation was $ 1,000 per year, with signs that the price of books rising faster than inflation. Some college bookstores offer used books to buy for a fraction of their original price. The founders noted how people became accustomed to renting things online because of services like Netflix.
In 2007, Rashid and Phumbhra relocated the company along the lines of Netflix as a way to rent textbooks to students. But there was little money in the beginning. When an order is entered, Rashid buy the book using a credit card and have shipped to the student; automation came later. At one point, with a huge volume of traffic on his credit card, the credit card company suspected fraud, but Rashid could persuade the credit provider to extend the credit using multiple numbers of the cards. The books normally rent around half the retail price of retail, for example, a manual of macroeconomics priced at $ 122 for a university library would lease for $ 65 at Chegg. But the savings varied from book to book. The cost of return transportation paid by Chegg, are the average of about $ 4 per pound. The simplicity of the model helped the marketing investor Ted Schlein said, "when you describe this idea to someone, they get it immediately. "
Stories in campus newspapers helped to spread the idea. A senior at the University of the State of Arizona has calculated would spend about half as many books as lease purchasing for a semester. The idea clicked. In 2008, the company hired former senior executive of Match.com Jim Safka to run the business. In 2008, revenues were about $ 10 million, in 2009, revenues were only $ 10 million in January, according Safka. The company has met the additional capital specialist venture capitalists. In January 2009, journalist Julie Schmit of United States Today Chegg described as a "leader" in "expanding the arena of college textbook rentals. "The company had 55 reps of customer service at this time. The company employs software engineers to improve its website. The office building of four-story Santa Clara "hums with the sounds of clicking keys on a computer, telephones ringing and excerpts from conversations" and the "split bins with paper plates and box soft drinks and snacks thrown. "It's call a spade" Mongo. "
In 2010, the firm rented textbooks to students on 4,000 campuses, according to Rashid, although a further assessment was that it was over 5,000. An evaluation of society, there were 4.2 million titles available to students in the online catalog of Chegg. From March 2011 Chegg has rented textbooks to over 6,400 college campuses. A key to the work model extends the ease of use of life books. Since many textbooks become outdated quickly, often replaced by new versions, a key to profitability is how much time a book can be re-leased, or reused, the market for rental cars, for example, companies such as Hertz and Avis buy new cars, but sell them after about a year or two of service. But what is the life of a book rented? "The market can be tricky," said market analyst Kathy Mickey, because teachers must use the same books for several semesters for the book-rental companies make money on programs.
Competitors
The market for university operating various competitors. While the main source of books for university students is university libraries, there are more options. The bookseller Barnes & Noble, which has 636 libraries of universities, began its own rental program manual in January 2010 largely modeled along the lines of service Chegg. A report is that Barnes & Noble books will lease about 42% of their original price, on average. Students can rent textbooks for their college bookstore or online, with orders shipped to their university library to collect, according to a report by the Associated Press.
The U.S. Congress has set aside $ 10 million to encourage university libraries to rent books and libraries start up leasing programs as well. Group Follett Higher Education has started up a rental program in 2009.
Peter King of Wall Street Journal reporter compared options for textbook rentals in April 2009. He compared companies such as the Book Renter, Campus Book Rentals, the Chegg, and also Textbooks.com selling books online but offers a guaranteed buyback by no later than the books "quasi-leases. "The king has compared offers related to an expensive manual accounting. The king has been some confusion with packets of books, with the back labels of various companies which had been ordered and it required matching orders with tracking Shipping email for bills that included the original sources were Chegg rentals and to book campus. A Chegg spokeswoman said the company sometimes uses "strategic partners" if a particular book is not in his warehouse, but the reporter asked whether the use of third party suppliers may cause confusion when books had to be returned at the end of the semester. Chegg was "the most sales tax for hire" and charged expensive. The least expensive alternative was Textbooks.com, although the company has required expenditures of $ 117.50 free; King conjectured disbursement franc would mean that university students have less money available during the semester. In all cases, reserves had to be returned by the deadline to make valuable savings. But alternatives online were significantly better than buying the book from the library of University, and selling it back to the bookstore at the end of the semester. In a test using a different book, Chegg had the lowest price, while other companies were not even the book. Textbooks.com, the report does not offer opportunities to buy all the books he sells.
Finances
Some note that Chegg is well funded. A report is that the firm initially received $ 2.2 million in funding in January 2007. In August 2008, he raised $ 7 million of associated company of Gabriel, and Mike Maples and Primera Capital. One source suggests that the company has raised $ 57 million in November 2009. Another suggests the total equity financing from the beginning of January 2010, is the order of $ 150 million, mainly from the investment of venture capital. Investors include related business analysis, top enterprises and the capital of TriplePoint.
Services
Chegg loads of books from a warehouse in Shepherdsville, KY, who are close to a UPS facility. Order books for students with the ISBN, title or the author's website Chegg. Manuals can be rented by the term as a quarter or semester. Manuals are shipped in boxes marked bright orange. At the end of the term, students receive, by mail, postage prepaid barcode print and affix them in any box. Students must pay a late fee if the book is not stamped by the deadline. Chegg allows "the discovery reasonable" in the books but do not let them write. The company offers a guaranteed return of 21 days for "any reason". In addition, Chegg has a program to buy textbooks for students to increase the inventory. Chegg also sells books that may not hire applicants because of student kits and other consumables.
Green Sales Promotion
Chegg promotes its service, in part, on the basis that it helps to prevent deforestation as fewer trees are cut to produce paper for books. To emphasize the point, Chegg has an arrangement with the comprehensive program of American Forests Releaf like every book rented or sold means that a tree is planted. The company boasts that more than four million trees were planted.
History
In 2001, Josh Carlson, Mike Seager and marks Fiddelke created the precursor to the business called Cheggpost.com, a classified service like craigslist for college students at the University of the State of Iowa. Aayush Phumbhra, who took care of the State University of Iowa and was an avid user Cheggpost.com, Carlson approached the end of 2003 with the idea of taking a national company. Phumbhra said the service to a friend, Osman Rashid, who saw the potential in the idea and joined as a senior to help finance the company Chegg, Inc.. formally launched in 2005 and was incorporated in August. Carlson remained until February 2006 and then left to pursue other interests. In April 2006, Chegg has found some initial investors, including Sam Spadafora, Mike Maples and others. The co-founders quit their regular jobs to focus on Chegg full-time. They examined services and have acquired three companies classifieds college and have made Chegg public through campaigns and oral campus. In summer 2007 the "textbookflix.com" launched firm that used the model to hire manual. Rashid and Phumbhra decided to switch the "textbookflix" to "Chegg.com 'in December 2007. The company has enjoyed strong growth. According to a spokesman for company, Chegg has leased its two millionth book in 2010.
