What Can Higher Education Learn from Amazon’s Destruction of Big-Box Bookstores?Tim Moore | Former Vice President of Digital Business Development, Pearson Education
Today, almost all of the independent and small chain bookstores and all of Borders’ locations are gone, and Barnes & Noble (B&N) is steadily closing stores while reducing the square footage devoted to books in its remaining stores.
What happened, and why so quickly?
In my last EvoLLLution article, I briefly described how the big-box booksellers eliminated independent booksellers. But as the big-box stores were finishing off the indies, Amazon started the process of finishing off the big-box resellers — ironically, when they seemed invulnerable.
It happened in two stages:
Amazon started out as an online startup. When it began, Amazon was slow and clunky on your screen, just like the early internet. Amazon seemed like a good idea, but could it really matter against these powerful big-box monsters?
The evolution from slow bandwidth connections (do you remember RAS?) to ubiquitous broadband came quickly. In fact, it came so quickly that Borders and B&N didn’t react quickly or well enough.
Borders was so slow to respond that they eventually capitulated their online business to Amazon (Borders’ online reseller site was run by Amazon with a Borders look and feel), sealing their fate well before their eventual demise.
B&N reacted reasonably quickly, but in a me-too fashion. They created an online reselling presence (bn.com), but did not take the strategic step of integrating bn.com with their enormous brick-and-mortar footprint. Perhaps more importantly, their me-too site offered an inferior experience to Amazon’s.
Amazon had made it more convenient to buy books.
But that was only Stage One. As we all have learned in the era of digitization, there’s always a Stage Two (and Three and Four, grinding inexorably).
Stage Two happened in November 2007, when Amazon launched the Kindle. Suddenly, customers could buy any book at any time from anywhere and it would show up on their Kindle device instantly. Talk about convenience!
The big box stores had been thoroughly beaten by their online competitor.
So, what does this have to do with higher education?
What Higher Ed Can Learn
We see digitization has taken a foothold in higher ed, and we know that once digitization begins changing a business, an industry or an ecosystem, it’s relentless.
Digitization in the form of online courses and degrees provides students with many benefits, the principal one being convenience: just like Amazon’s Kindle. That convenience can be a game changer for the more than 40 percent of American students enrolled in higher ed who are older than the traditional student age of 18 to 25. No commute after a day at work and/or with childrearing responsibilities; the opportunity to be in the “classroom” when you can. This is a powerful alternative to brick-and-mortar attendance.
But it won’t stop there.
Here are some of the (many) other digital developments playing out before our eyes:
- Massive Open Online Courses (MOOCs) deliver free instruction from some of the world’s greatest scholars who teach at the greatest universities. The Wharton School of the University of Pennsylvania offers its four core courses as MOOCs.
- Big schools with national and international brands are building full curriculum online degrees, allowing them to enroll a student anywhere in the world. Arizona State University’s efforts illustrate this.
- Schools such as Western Governors University and Southern New Hampshire University provide competency-based, inexpensive online degrees.
These developments will put more pressure on the already-stressed schools with less well-known brands. Many, in fact, are seeing declining enrollments.
Now their competitors can provide more convenient instruction. Some of them can reach out from across the country (or the world) to poach students in their previously safe local geographies. And some of those will be famous universities known everywhere and ranked in the top 50 to 100 schools in the world. Ultimately, here is where we may see the eventual “Amazon-ization” of higher ed, the consolidation of business around a much smaller number of vendors.
It sounds dire, but there are strategic options. So, let’s end with some questions I think every school — large, small, well known and not so well known — should be contemplating:
- How can we make some of our offerings more convenient to students?
- Can we appeal to the working professional or the non-traditional student?
- What digital solutions can we bring to the market to compete?
- Are there hot topics that lead to employment that we can offer as nanodegrees or certificate programs?
- What “mid-skill” jobs can we educate for?
- How can my school partner with the major businesses in my area to become their training company of choice for all their needs?
- What specific needs of our geography can we address?
- Where can we turn for impartial strategic advice on these and other questions?
We all have choices, just like Borders and B&N did. Will we make them?
Author Perspective: Business