Chegg: Big Etailer on Campus


You may not be familiar with Chegg if you’re out of college, but it has quietly become one of the fastest-growing, second-generation e-commerce companies around today. Think of it as “Netflix for textbooks,” a youth-savvy e-player that’s poised to get bigger thanks to more than $140 million in backing.

Chegg boasts 4.2 million books, accessible to college students on 6,400 campuses. As TechCrunch comments in its look at the brand’s growth, “Chegg is disintermediating the $5B+ college textbook market by providing a low-cost, short-term, nationwide rental alternative to the high-priced university bookstore.”

Chegg, short for “chicken and egg,” has built a loyal following and developed a sharp brand positioning in the red-hot market for virtual rentals.

If things pan out as its founders project, it has the potential for upending entrenched retailers and e-tailers such as Amazon, Apple, Barnes & Noble, and Follet. Even traditional textbook retailers such as McGraw-Hill now offer electronic versions of titles.[more]

As the rent vs. buy debate heats up, Steven Carpenter, CEO of Cake Financial, predicts for TechCrunch that Chegg, wth revenues of $130 million this year, is poised to control 80%+ market share.

Chegg cofounders Osman Rashid and Aayush Phumbhra launched their startup in 2003 as CheggPost, a Craigslist for college students to buy and sell everything possible required for campus life.

Used books were the hands-down most popular and expensive item – after tuition, room and board. But being a seasonal market, students sold their used textbooks back to the college stores for minimal amounts when they could find no easy alternative at the end of each semester.

So Rashid and Phumbhra went back to the drawing board in 2007 and reinvented their model to “market maker,” completing a food-chain and brining liquidity to an inefficient business.

An organic chemistry textbook retailing for $123 was available on Chegg for $33; a macroeconomics textbook retailing for $122 available for one semester for $65, plus round-trip shipping averaging $4 per book.

Reminiscent of the early days of online movie rental competition, from which Netflix emerged the winner, Chegg stands a very good chance to take market share away from the big brands.