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Textbook and Business Model

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Website Analysis-Chegg. com When it comes to looking for e-businesses on the internet, there are thousands to choose from. I found there to be many different kinds of e-businesses. Some only meant for the internet, some that were e-businesses that also have locations that you can visit. Yet there are some that were originally brick and mortar type stores that opened an e-business version of their stores or became a primarily online e-business. Out of all the e-businesses I saw online, there were few that I saw that were really able to be analyzed effectively and yet be fairly unknown by others in the class.

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One I found really interesting that I have noticed that few other students really know about is Chegg. com, a young and growing textbook company. Chegg. com is first and foremost, a textbook rental website (The company decided on Chegg as it was an interesting mix of the words “chicken and egg”). However, it was not always that way.

It was originally created in 2001by three college students from Iowa. Their names were Josh Carlson, Mike Seager and Mark Fiddelke . The original site was called cheggpost. com. This website was quite different from the website we see online today (cheggg. com).

The website cheggpost. com was a website made and marketed primarily to college students, and was very similar to the website craigslist. com, as it sold everything that many college students had or needed. Advertising was supposed to be the source of income, however the used textbooks was the biggest sales on the website (as most college students are looking for cheaper ways to get their textbooks). The website, while not being immensely popular nationwide, did attract some people. A repeat user of Cheggpost. com named Aayush Phumbhra mentioned the website to Osman Rashid, a friend of Aayush.

Osman saw the possibilities in the website and joined the company in 2005 as Chief Executive Office. At this time, the company decided to deliver a formal announcement of the creation of Chegg Inc. After gaining some initial investments & acquiring other small firms, as well as testing out some initial services, Chegg Inc. launched textbookflix. com, their system of renting textbooks to people, which they modeled after Netflix. Later in 2007, they decided to rename the service as Chegg. com. There were some initial problems with money as Rashid used credit ards to buy books before renting them. As soon as 2010, Chegg rented its two millionth book. Chegg. com has also enjoyed growth due to word of mouth as well as stories in college newspapers across the nation. According to the company’s estimates, Chegg. com has rented books to students in well over 4,000 campuses. They also state that they have over 4. 2 million titles in their catalog on their website. Chegg also has a program where they buy books from people (which could be used to replenish their rental stock as well). When reviewing Chegg. om, I found it difficult to see the whole picture as the business is still relatively new and small in comparison to other e-business companies. However, while their business is fairly new and somewhat unknown, there is still plenty of knowledge that we have on them. So, to begin our analysis of their business model, we first need to define what a business model is. A business model is defined by the books as “a set of planned activities designed to result in a profit in a marketplace” (Traver p 66). Since Chegg. com is a website, it would actually be using what is known as an e-commerce business model.

This means that Chegg. com uses the World Wide Web to its advantage to reach people in universities across the nation. When reviewing the business model of any company, there are “eight key elements” that should be reviewed and analyzed. The eight components of a business model are: Value proposition, revenue model, market opportunity, competitive environment, competitive advantage, market strategy, organizational development, and management team. These eight elements help describe how a business like Chegg. com will succeed and make profits, as well as continuing their business into the future.

The first element to review for Chegg is ‘Value Proposition’. According to the textbook, the questions we should ask is “Why should the customer buy from me? ” (Traver p 67). Chegg has one simple purpose: to help college students. They do this in two different ways: they give an alternative to college students by allowing them to rent textbooks from them for a low price and they will buy some books that college students are willing to sell. In this situation, college students across the nation are the customers (the primary ones at least, I am sure others who are not in college use the service from time to time).

The whole reason that college students should use Chegg. com is the same reason we all decide on certain services: money. College students are known for being short on money due to the fact that going to college is expensive. When using this service, college students can save $500 or more a year, according to Chegg. com. Not only do college students save money by renting textbooks, they can be green and help save trees, as with no demand for textbooks to be printed means less paper being needed. Chegg. om also donates a tree for every book rented from their services. By using this service, students can avoid the hassle of having to find room to store all of their used books or having to sell them back to get a little bit of money. The service Chegg offers saves them plenty of money and takes away the need to store books somewhere else, as students can simply return the books at the end of their rental period. Revenue model is another element of the business model. According to the book, the question we should ask is “How will you earn money”? (Traver p 67).

There is two ways that Chegg makes money: renting books and selling books (however selling is barely mentioned anywhere on the web when it comes to Chegg). Renting books is the main point of their business as that is what brings in the money. However this can be a double edged sword for them. If the book does not get rented enough times to cover all of the costs of the purchase of the book, then Chegg could end up losing money on the book. To help fight this, Chegg does not rent every book at the same price (how they decide what price to rent at is unknown).

Usually the savings for a college student renting a book from Chegg can be around 40%-60 %, depending on the book and its age (actual savings will vary, based on personal experience). Chegg is also furthering their presence in universities s as they are making deals to be available in some university bookstores, which will help them to earn money. According to the book, Chegg would be a “transaction fee revenue model”. The third element of a business model is “market opportunity” The book’s questions for this element is “What market place do you intend to serve and hat is its size? (Traver p 67). As explained above, Chegg. com services is generated toward mostly college students (others can rent as well but most rentals are textbooks, which would defeat the point for people who just want a general info book or a book to read for fun, as they could go to a library for that) . This means that their marketplace is mostly the students at universities, especially the ones who need help saving money on textbooks or the ones who don’t want to keep their school books. The size varies as the amount of students in school varies from time to time.

School is also seasonal so the size in summer versus the time in fall will vary. Multiply this by thousands of colleges across the U. S. and you have a large market size that goes up and down, depending on when their school starts. The fourth and fifth elements of a business model are competitive environment and competitive advantage. The questions from the book for these elements are “Who else occupies your intended marketplace? ” and “What special advantages does your firm bring to the marketplace? ” (Traver p 67).

Chegg’s intended marketplace is vast, yet small, depending on how you look at it. There are many companies that provide solutions for students, such as cheap books and electronic books. For instance, Half. com, Amazon, and other website offer solutions for college students, and this shows us the larger portion of this general marketplace. However, Chegg. com is really only a rental website, therefore separating itself from book resellers like Amazon and Half. com. In this case, Chegg. com is really part of a smaller marketplace.

Other companies that occupy this marketplace are Barnes and Noble (which started a rental program recently), several college bookstores (Like the Follet Group) bookrenter. com, and campusbookrentals. com. Of course these are the more notable companies/options, there are a few small starters here an there that are not really worth mention. As for special advantages that Chegg brings to the marketplace, there are a few worthy of mention. For one, they offer relatively low process for rentals in comparison to buying the books.

They have also got a stronger national footprint in their market in comparison to their competitors. Their website is also easy to use and offers a catalog of well over 4 million books for rental. In addition, for every student that rents from their website, Chegg plants a tree. They now boast that they have planted over 2 million trees. The sixth and seventh elements for the business model are market strategy and organizational development. The question from the book for market strategy is “How do you plan to promote your products or services at attract your target audience? (Traver p 67). Chegg has never been a strong promoter from what I can tell. According to my research their primary form of promotion has been the mostly free kind: word of mouth, college ads, and college articles. While it would seem that this type of promotion is weak, it seems to have worked for Chegg as they pull in millions of dollars year now. The question for organizational development is “What types of organizational structures within the firm are necessary to carry out the business plan? ” (Traver p 67). The first and foremost part is the website.

Without it, Chegg would not exist, so Chegg must have good and reliable IT technology to control transactions. They must also have a good management team to run the operations smoothly in order to succeed. This includes their CEO Osman Rashid. They also need a good relationship with UPS in order to ensure proper delivery of their product as they is the main way to bring their product to the customer. They also need a good customer service team to handle transactions as needed and to answer questions as well has handle issues with customers from time to time.

Customer service is key as keeping the customer happy means repeat business for Chegg. The eighth and final element of the business model is management team. According to the book, the question we should ask ourselves is “What kinds of experiences and background are important or the company’s leaders to have? ” (Traver p 67). It’s hard to say what types of experiences the managers of Chegg should have. One would think that running a business and making a profit would be a good experience; however Chegg was a startup business from college students, who had no real experience.

Their CEO, Osman Rashid, who ran some online websites before had some experience, but it still doesn’t seem enough. What this management team really has is trial and error experience, and that’s why Chegg is successful. The management team tried out different services until they found that used books were their biggest seller and from that they discovered the need for cheap books for college students. From that and from the idea Netflix had, they created Chegg, which is what we see today as the textbook rental service. When it comes to value, Chegg offers plenty of it to its customers.

Its low prices on textbook rentals alone are its greatest value to its main customers, college students. Its value chain is really how it offers lower prices to college students, it gives a discount on every book (the rental price) compared to the actual cost of the book and then it ships via UPS. It also provides money back guarantees, free return labels, access to quality customer services, and it even provides freebies in their shipments such as pens and notepads! They even add value by planting a tree for every new student who purchases from them. Chegg’s strategy however, is uncertain.

With an unknown setup on how they get rid of books once they are outdated, it’s hard to say what happens o old books once they are outdated or worn out(some sources say they sell books, but there isn’t much info on what happens to the old books). With the emerging tablets in the technology world, we will start seeing a lot more e books out there than ever before, possibly making their current business model difficult to continue with. In the present however, to combat some competitors, Chegg is making deals with college books stores to offer their services through campus bookstores.

While the bookstores will get some profits from rentals, Chegg will also receive some revenue, as well as expand their presence, become more renowned throughout the nation, and possibly expand their business. Chegg has a few competitors it currently battles for the market. As I stated earlier, its competitors are: Barnes and Noble (which started a rental program recently), several college bookstores (Like the Follet Group) bookrenter. com, and campusbookrentals. com. We can also possible consider libraries, Half. om, Amazon, and other book renters or retailers as competitors, as they do take away possible renters if their prices are low enough. Companies who offer electronic versions of their books also provide a challenge with the emergence of the new tablets in today’s world. After reviewing Chegg. com, I can say that there is a lot to learn about e-commerce companies. We can see how they work and how they thrive or fail, depending simply on their business model. Companies like Chegg come and go all the time. While Chegg is thriving now, who knows where it will be in ten years from now.

After reviewing Chegg, while the future may be clouded, its safe to say that its here to stay for the foreseeable future. References Chegg. com: Rent Textbooks. Cheap Textbook Rentals for College. Web. 07 Mar. 2011. . Laudon, Kenneth C. , and Carol Guercio. Traver. “E-Commerce Business Models and Concepts. ” E-commerce: Business, Technology, Society. Upper Saddle River, NJ: Prentice Hall, 2010. Schmit, Julie. “Chegg CEO Rashid Applies Netflix Concept to Textbooks – USATODAY. com. ” News, Travel, Weather, Entertainment, Sports, Technology, U. S. & World – USATODAY. com. 12 Jan. 2009. Web. 07 Mar. 2011. . Carpenter, Steve. TC Teardown: Chegg Is A Money Machine. ” TechCrunch. 05 June 2010. Web. 07 Mar. 2011. . Keller, Josh. “Online Textbook-Rental Company Moves Into Bricks and Mortar – Wired Campus – The Chronicle of Higher Education. ” Home – The Chronicle of Higher Education. 09 Feb. 2011. Web. 07 Mar. 2011. . “Chegg. com – A Sustainable and Innovative Business Model | Padosa. ” Padosa – Helping Small Businesses Get Green. 23 Sept. 2009. Web. 07 Mar. 2011. . “Chegg. com or Rentalic. com Which Business Model Would You Go For? | Sukhjot (Joti) Basi. ” Sukhjot (Joti) Basi | Experienced Product Management Professional. 06 Jan. 2011. Web. 07 Mar. 2011. .

Cite this Textbook and Business Model

Textbook and Business Model. (2019, May 02). Retrieved from https://graduateway.com/textbook-and-business-model-2-625/

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