Here are some updates based on my experience using flipsy for the last 45 days. I also updated my spreadsheet forescast which is below.

1. return rate so far is 100%. I updated the spreadsheet to reflect an uncollectable book return rate of 2%

2. I have not found a good source of wholesale inventory yet so I changed the inventory cost to 100% of retail value. I have been having most of my books drop shipped by textbooks.com They are high priced but have very good customer service, ship the next day and only send out books in that are in good condition

3. I updated the flipsy commission rate which was raised from 10% to 12%

4. Getting books returned has been a pretty easy process. Using USPS shipping service I can email a prepaid postage label to the renter. I provide instructions to the renter to take the book and prepaid label into the post office. Most post offices sell a bubble wrap envelope for about $2.00 It works great for shipping books. (how to get set up with prepaid labels through USPS)

5. I have had only a couple customer service issues. Most of these should be headed off at the pass once we get a few updates to the flipsy system which include more automated email contacts, better bulk order updates, better reports and order searches. We are working hard to get these in place as soon as possible.

6. I reduced the inventory depereciation rate from 25% to 10%. I really do not know what the correct number is for this but a compounded 10% seemed more realistic than 25%. This will be a big factor in determining the success of the business. I am guessing it will be highly dependent on the type, condition and year of the books bought.

 

• Sign up for a Flipsy account
• Sign up for a Paypal account
• Determine what inventory to rent
• Price your inventory
• Upload your inventory on Flipsy
• Ship or Drop ship your rental orders
• Provide customer service to rental customers
• Receive your inventory back
• Collect on unreturned books

Sign up for a Flipsy.com account
Sign up is free and easy. All you need  to provide is basic information to get started. Once you have an account you can purchase listing credits. The listing credits are valid for a 30 day period from the date you post your listing. Listing credits cost from $1.00 to $00.10 per credit.  Flipsy also charges a 10% fee per transaction.

Sign up for a Paypal account
If you do not already have one you will need to sign up for a Paypal account. Flipsy.com accepts all major credit cards through the the Paypal merchant service. When you get an order the rental fee will be deposited directly into your Paypal account. Flipsy.com will place a reserve on the renters account for the difference between the rental fee and the replacement cost of the book. If the book is not returned within 30 days of the rental period Flipsy will charge the customers Paypal account for the difference and then credit your account.

Determine what inventory to rent
You have a couple of options when determining what inventory to rent. The first option is to build your own inventory from buying books from students, professors or college bookstores. You can also find students selling their books on craigslist or make a deal with a textbook wholesaler to supply you with your inventory.

The second option and the method used to get chegg.com, bookrenter.com and campusbookrentals.com started does not require you to have a preexisting inventory. You can list any book on Flipsy and when a customer rents from you, place the order with an online marketplace with the customers shipping address. You are billed for the order and the order is shipped to the customer.

Choosing which books to list or purchase requires some research. There are millions of books. Not all make good rental options. Which books work for rentals? You need enough margin to pay for shipping to the customer and back from the customer(if you are going to offer free shipping)in addition to a reserve for unreturned or damaged inventory.

Textbooks are a great fit for the book rental model. Textbooks high cost coupled with high demand mean that books rented out the first time can either be rented out again or liquidated through an online buyback company or sold through an online marketplace next semester.

To find what textbooks are popular you can use our list of popular textbooks for a start. Barnes and Noble and Amazon also have textbook sections with sales ranks.

I have chose to drop ship to get started. So far it was worked well. I have shipped 10 books without a complaint. When an order comes in I use  SpotCost.com to find the best price and book condition. It also allows me to select a bookseller that is closer to the person renting. This speeds up the shipping process.

Price your inventory
For my pricing model I wanted the following...a competitive price that allowed me to make a profit on the book after one rental assuming I could resell the book for 40% of the books purchase price. My goal isn't to build a huge rental inventory that I rent out over and over. Instead I am trying to get books that I can rent out once then sell back to buyback companies or through marketplaces to students for more than all the costs it required to get the book.

I created a spreadsheet to help me do the pricing. I take the book purchase price, current lowest rental price and the going buyback price from Direct Textbook and enter those into the spreadsheet. Based on this information I am able to price each book based on my criteria (competitive and profitable)

Upload your inventory
Flipsy.com has a feed upload process.  Uploading an inventory of 1 to 100,000 takes only a few minutes. We provide all the book information and pictures so there is no need for you to collect that information.

Shipping or Drop shipping inventory
Now that your inventory is listed the next step is to start processing orders that come in. Since I am drop shipping my orders from online suppliers directly to the student I use our price comparison service www.spotcost.com to find the best price for books along with getting cashback on purchases. To find and place an order takes about 5-7 minutes per book. When placing your order you use the renters address for the ship-to. Of course you only need to order the books when you receive a rental order.

The time it takes to ship books from your own inventory will vary. If you get lots of orders in a day the time per book will go down. If you get one order per day then your time will go up.

Providing customer service
I have listed nearly 50 books and rented out 10. There has been very few customer service questions or issues. I have only received a couple of questions, one asking whether or not I could offer faster shipping and another asking how long the book will take to arrive. As an aside this is one of the advantages of drop shipping, you can choose a location closer to the renter and they will get the books faster and be happier.

I assume the customer service requirements going forward will be similar to the experience I have had so far.

Receiving books
Once the rental term expires the student will need to ship the book back to you. The books need to be recorded as received and stored for liquation for the next rental term or liquidation.

Collect on unreturned books
Flipsy automatically sends out reminders to customers to send their books back  but you can also choose to send your own emails. If the book is not returned Flipsy.com will charge the customers account for the difference between the books replacement cost and rental fee and transfer that amount to your Paypal account.

In the next post I will cover how to offer free return shipping to customers.

Here is a screen shot of a spreadsheet that will hopefully help you get an idea of the costs associated with book rentals along with some projected profits. (If you would like a copy of the spreadsheet email me) 

The textbook and book rental business is not an easy route to
mountains of money but if you have an inventory or credit to build
an inventory, during the course of a 3 to 6 month period there is the
potential for a decent return on investment of both time and money.

Next posts will outline what work is involved in the book rental process.

The first textbook rental company I was aware of was chegg.com. They
started as a classified posting service for college students but after
realizing that the biggest selling item on their site was textbooks
they decided to focus solely on this market.

Instead of selling the books they decided to rent the books out at
about 40% off the used price. They didn't have an inventory to start
out with so they drop shipped the books from different online
marketplace sellers listing on Amazon, Abe and Alibris.

Chegg's model was followed by bookrenter.com and
campusbookrentals.com. Other online textbook sellers have also started
to offer rentals.

You can read more about chegg at wikipedia http://en.wikipedia.org/wiki/Chegg
Also techcrunch did a overview of chegg's rental business model
http://techcrunch.com/2010/06/05/teardown-chegg/

Next up I will go over some of the financial aspects of starting a
rental business on Flipsy.

Hello! I'm Chris. I work with Morgan, Megan, Eduardo, Ben and Luc at
Direct Textbook. Since 2002 we have run Direct Textbook,a textbook
price comparison service and SpotCost, a price comparison service with cashback.

A lot has changed in the world of textbooks during that time. One of
the biggest changes is that companies like chegg.com, bookrenter.com
and campusbookrentals.com started offering college students the
ability to rent their textbooks instead of purchasing them, saving the
student as much as 50% off the used textbook price.

As we looked at the textbook rental business we saw a possible
opportunity in creating a textbook and book rental marketplace.
Instead of one company servicing customers from a central distribution
center with lots of overhead, it may be more economical for students,
schools and small businesses to offer rentals through a marketplace
similar to the Amazon, Abe or Alibris book marketplaces. To see if
this is true or not we created Flipsy.com.

To get Flipsy.com off the ground I have started to list textbooks for
rent on the site under my own account. (December and January are two of
the busiest months for textbook buying and renting)

I am going to use this webpage to share the steps I am taking in setting up my Flipsy.com rental business. I already have some posts in the cue covering what I have learned from
listing my first rentals. Some of the topics include: "how to handle
shipping", "what happens if I don't get my book back" "does it make
financial sense?","where do I get inventory from", "how to price your
rentals" "why rent my inventory when I can sell it?" So stay tuned.

We are looking forward to making Flipsy a success. For that to happen
we know we need the service to work for owners, renters and us. If you
have any ideas on how we can make the site work better for you please
let us know. You can reach me at chris@directtextbook.com