In 1999, his 90 brick-and-mortar college bookstores were a financial success, but Wallace Wilkinson envisioned a system of online textbook sales to college students as a way to make even more profits. So Wilkinson launched eCampus.com. Unfortunately, the endeavor didn’t turn out exactly the way Wilkinson wanted it to.
Kentucky governor from 1987 to 1991, Wilkinson had rounded up a band of dot-com investors, among them Dave Thomas, founder of Wendy’s, and James Patterson, founder of Chi-Chi’s Mexican Restaurants and Rally’s Hamburgers.
“Wallace started it with outside investors of $91 million. He controlled the company,” said Matt Montgomery, current president and CEO of eCampus.com, in a recent interview. “It was a great idea to sell textbooks online. There were some other people hinting about doing it then, but eCampus was the first to sell used books online.”
And then, said Montgomery, “Wallace ran off with our money.”
In 2001, a group of Wilkinson’s creditors sued him. In federal court, Wilkinson was accused of running a Ponzi scheme, allegedly collecting millions of dollars from investors in a variety of his ventures so he could attempt to re-pay his many creditors. A little more than a year later, Wilkinson died.
Montgomery had joined eCampus.com at its inception. He had previously been vice president of operations for Cengage Publishing, the nation’s second largest textbook publisher.
“The truth is, when I found out that the ex-governor and Dave Thomas were starting this business, I thought I was going to get ‘dot-com rich’ and dropped everything and moved down here [from Indiana],” Montgomery said.
In the midst of Wilkinson’s financial troubles, eCampus.com entered bankruptcy to sort out its affairs. Yet Montgomery hung on, firmly believing in the online textbook-selling model.
Not long after, eCampus.com emerged from bankruptcy.
“We really had to do that to clear out the old ownership,” said Montgomery. “The website never went down. We never stopped shipping to customers. It was really the best thing that could have happened. We then became extremely profitable over the years.”
This summer marks the 15th anniversary of eCampus.com, the online textbook business that endured such a rough initiation.
If you were a college student in 1999, there was usually only one place to buy textbooks and that was your college bookstore.
“So eCampus.com really gave students the first alternative to shopping around for textbooks,” said Montgomery. “Selling textbooks on college campuses was a monopoly. Students were paying full list price. We were the first alternative out there for college students.”
Operated somewhat like Amazon.com, eCampus has a centrally located textbook distribution center on Palumbo Drive in Lexington. Montgomery calls it one of the most automated dot-com distribution centers in the country. While eCampus sells new and used textbooks nationwide, most of its sales are in New York, California, Texas and Florida.
“We can send textbooks to 75 percent of the U.S. population in two days and the rest of the country within three days, all by UPS ground,” he said. Students around Lexington can also walk into the distribution center to obtain books in person, if they prefer.
For example, a student hunting for Communication in Our Lives, a textbook offered by publisher Cengage Learning, has several options. He or she can buy the book new or used, rent it or download it as an e-textbook.
“We have a full digital e-textbook library at eCampus with all major textbooks,” said Montgomery, who adds that the most expensive option for students is buying a book new; the cheapest is renting it.
With annual sales of $60 million, eCampus has about 150 employees. Half are technicians like programmers, hardware engineers and Web administrators. The rest are a combination of full- and part-time workers who get the books out. The company hires temps during rush times; many return every year, and a lot of them are college students.
In addition, eCampus employs virtual “bookstore managers” who handle accounts for schools that list the textbooks needed for their courses with eCampus.
“You shut your physical bookstore down and send your students to us because they’re already going to the Internet,” Montgomery said. “It’s hard for bookstores to make money now. The problem with college bookstores is the books.”
Montgomery said college bookstores make great gift shops and coffee shops but aren’t an efficient way to get books into the hands of students.
“Most students visit campus bookstores for one week in August and one week in January, and the rest of the time the stores aren’t busy,” he said.
Montgomery said the textbook market and the Internet have changed dramatically. “It’s a testimony to the people of eCampus.com, who are innovative and nimble,” Montgomery said. “Our in-house programmers are troopers and go wherever the market is going. Our motto is ‘Adapt or Die.’”