ICBA 2011 Dynamic Pricing Panel

James Howard, Academic Materials Manager

Quick Context….

OSU Bookstore:

– University on quarter term system

– Bookstore has non-profit status - 501(c)(3)– Textbook operation is “cost-recovery”

– Discounts at point of purchase 10%– Realizing a 17% margin after discount

– Conduct own end of term buyback – no contract buy– Retain up to 60% of wholesale buyback purchases for future

term use

– Inventory control system allows for decoupling New and Used pricing

– One buyer determines both New, Used and buyback quantities

Engaging “Marketplaces”

“It’s cheaper on Amazon…”

OSU Bookstore generally competitive with online prices if title is early in edition cycle.

– Challenged on price with titles 3-4 years into edition

– Buyback prices exceeded online offers

Dynamic Pricing since 2006

- Not every title, just those deemed most vulnerable to marketplace pricing

- Selective marketplace purchases

- Effort focused solely on Used pricing- Costs/Margins can be controlled

- Maintain a minimum 30% margin

- Average around 200 titles a term - About 10-15% of total titles per term- Reducing used shelf price on average 20-30%

Quick Overview of Parameters

Process begins with QTP stage for a term

- Factors that influence dynamic pricing possibility

- Buyer’s Guide notes

- Age of edition

- Amount of previous term Used sales

- Quantity projected at lowered buyback price

- Wholesaler previous invoice totals

- Timing of process and sales floor opening

Example of Spreadsheet

On Going Process

– Coordinated Focus

– Changing buyback prices

– Altering shelf prices prior to opening sales floor

– Evaluating altered price against current invoices

– Reviewing item price after any updates or receiving

Good Results…Generally

Driving pricing down on titles for students– Especially on customs and repeated use titles

Positive sell through on selected titles– Loss of units sales overall not accelerating

Achieving desirable margin– Impact from buyback pricing and speculative

books

Staying competitive with older editions– Prices comparing favorably with marketplaces

Could Do Better….

Tracking actual influence

– So many variables gets fuzzy drawing direct causal relationship

– Intuitively know it is right thing

Promotion

– Enhancing awareness of store’s efforts– Shelf cards– Posters, fliers, etc…

– Not convinced being noticed so dropped

Maybe something more direct???

Buy here, save…and then ZIP IT!!

Where To Now…

Automate process– Reduce time/labor – Expand titles per term

Shift focus– Buyback process more prominent– Retail pricing based on initial costs

Compare pricing models– Not convinced students actually do– Automated programs on website

Rental Program- Questioning need to continue dynamic pricing- Buyback component will probably continue