EDITOR’S NOTE – This is the first in a two-part series examining the recent closure of two online services targeting the student market. Today’s article looks at the end of bookseller BigWords.com and the difficulty in marketing college textbooks online. Tomorrow’s story examines the legislation that forced Versity.com, an online notetaking service, out of the market.

BigWords.com, an online college textbook vendor, shut down on Oct. 20 after laying off close to 100 workers, leaving employees and competitors to ponder the reasons for their demise and the financial promise of selling college textbooks online.

In 1997, BigWords, along with Varsitybooks.com, was among the first Internet companies to target college textbook sales. With an aggressive advertising campaign led by students who blanketed campuses with BigWords bouncy balls, the company started a revolution in on-campus marketing. After three years, however, an inability to draw students away from traditional bookstores cost the company its existence.

Online booksellers have faced a fierce counter-campaign from college bookstores, which have contested the price-slashing claims with advertisements and legal action. In October 1999, Varsitybooks agreed to an out-of-court settlement with the National Association of College Stores after the NACS threatened to sue Varsitybooks for “false and deceptive advertising of the discounts it offered students,” according to an NACS release.

“We took action on behalf of the student consumers,” NACS Public Relations Director Laura Nakoneczny said.

As a result, Varsitybooks, which is still in operation, must now follow the NACS advertising code.

BigWords was hit with similar charges from the national advertising division of the Better Business Bureau. A message on the BigWords Web page stated that they had “succumbed to the powers that be.”

The UCSB Bookstore, which has run advertisements discrediting the price-slashing claims of online companies, has not been negatively impacted by the recent rapid rise of online alternatives, Bookstore Director Ken Bowers said.

“Campus book sales are up and have been up,” Nakoneczny said. “The effects of the online competitors have been positive for us. They forced us to step up on advertising and marketing strategies.”

Bowers said BigWords’ inexperience in managing textbook sales, combined with a poor delivery system, led the company to struggle in a fierce market.

“What you have here are companies started by people not in the textbook business, thinking that textbook prices are too high – which most students do, which I did when I was a student – but without checking the business models very carefully,” he said. “The pricing model is fairly similar no matter where you go – UCSB, UCLA, Harvard. There just isn’t a lot of discount potential there.”

The 2000 College Store Industry Report, published on the NACS Web page, showed that for every dollar spent on a new textbook, 24.1 cents went to the store, with only 4.7 cents showing as actual income. The author received 11.5 cents, while the other 64.4 cents went to the publisher.

NACS studies also estimated 1999 online text sales at less than 6 percent of the market.

“What we saw was a great amount of hesitancy on the part of the students about buying online,” Nakoneczny said. “They weren’t really comfortable with that, and we are beginning to see that statistical data play out.”

Andrew Duncan Love, a former campus consultant for BigWords, said that the company could not attract enough consumers to support its expanding market.

“It was in fact cheaper, and not just with BigWords,” he said of online book sales. “The problem with BigWords was with the other avenues of business [other than textbooks]. They tried to expand too fast and could not get the business.”

Love, who served as a liaison between the UCSB campus and BigWords from January of this year until the company failed in October, was surprised by the shutdown.

“Basically [the closing] was out of the blue,” he said. “I was shocked.”