Dive Brief:
- Chegg is selling off most of its college textbook rental business to Ingram Content Group.
- Ingram will begin buying Chegg’s inventory of textbooks on May 1, USA Today reports.
- Chegg.com will remain as a destination for textbook renters, with Ingram handling the orders and inventory and paying Chegg a commission.
Dive Insight:
Chegg got its start as a college textbook rental business but has expanded into less cash-intensive digital student services that include recruiting, e-learning, and tutoring. Jettisoning the rental business frees up the company to focus its investments on that digital side. Ingram’s specialty, on the other hand, is distributing books and magazines to retailers, so the Chegg deal fits because of its focus on logistics. Chegg will be out of its warehouse operations by the end of the year.
The company's shares jumped more than 20% following the announcement and are, at time of publication, trading at $8.40 per share. Chegg’s revenue for the fourth quarter of 2014 was up 9.4%, but its textbook rental revenue fell 9.1% while its digital services revenue was up 70%.
