Chegg is a company based in Santa Clara, California, that specializes in online textbook rentals, homework help, online tutoring, scholarships and internship matching. It is meant to help students in high school and college. The company was created in the United States by three Iowa State University students in 2001 and was founded by entrepreneur Aayush Phumbhra. The name Chegg is a contraction of the words chicken and egg, based on the founders’ experience after graduating from college; they could not land a job without experience, but could not get experience without a job, a chicken or the egg type of quandary. Chegg, the student hub, is transforming the way millions of students learn by connecting them to the people and tools needed to succeed in college. From starting as a textbook rental company to evolving into a student hub, Chegg is enhancing education for millions of students by saving time, money and helping them get smarter. Chegg entered into a strategic partnership with Ingram Content Group to transfer ownership of both current and new textbook inventory to Ingram, equaling approximately 10% of Chegg’s anticipated textbook volume for the Fall 2014 semester. The partnership is a significant change in direction for Chegg and reduces the overhead costs of handling storage and direct shipping. In February 2015, Chegg announced that it would deepen its partnership with Ingram by making them responsible for purchasing 100% of textbook inventory. Chegg continues to market the books to students directly, as well as control pricing and catalog selection, while Ingram handles distribution, logistics and warehousing of the books. The intention of the strategic move is to cut costs and work towards 100% digital revenue.
Chegg ships textbooks from a warehouse in Shepherdsville, Kentucky, which is close to UPS's Worldport air hub facility. Students order books by entering the ISBN, title, or author on the Chegg website. Textbooks can be rented by the term, such as a quarter or semester. Textbooks are mailed in branded bright orange boxes. At the end of the term, students receive, by email, a pre-paid postage barcode, which they print and affix to any box. Students must pay late fees if the book is not postmarked by the deadline. Chegg permits "reasonable highlighting" in books but doesn't permit writing in them. The company offers a 21-day money-back guarantee for "any reason". Further, Chegg has a program of buying used textbooks from students to increase inventory. Chegg also sells books that may not be rental candidates because of student kits or other consumables.
The college textbook market has a variety of competitors. While the main source of books for college students is college bookstores, there is an increasing number of options. Bookseller Barnes & Noble, which owns 636 college bookstores, began its own textbook rental program in January 2010, largely patterned along the lines of Chegg's service. One report is that Barnes & Noble will rent books at about 42% of their original price, on average. Students can also rent textbooks from their college bookstore or online, with orders shipped to their college bookstore for pickup, according to one Associated Press report. The U.S. Congress set aside $10 million to encourage college bookstores to rent textbooks, so bookstores are starting a up rental programs as well. Follett Higher Education Group started up a rental program in 2009. Wall Street Journal reporter Peter King compared several options for textbook rentals in April, 2009. He compared firms such as BookRenter.com, Campus Book Rentals, Chegg, and Textbooks.com which sells textbooks online but offers a guaranteed buyback later, making these books "quasi-rentals". King compared offerings related to an expensive accounting textbook and noted some confusion with book packages, with return labels differing from the firms which had been ordered from; figuring out that the original sources were Campus Book Rentals and Chegg required matching the shipping tracking orders with the email invoices. A Chegg spokesperson said the firm sometimes uses "strategic partners" such as eCampus.com if a particular book isn't in its warehouse, but the reporter wondered whether the use of third party suppliers might cause confusion when books needed to be returned at the end of the semester. Chegg was the "most expensive rental" and charged sales tax. The least expensive alternative was Textbooks.com, although this firm required an upfront expense of $117.50; King surmised the upfront payout would mean college students had less money available during the semester. In all cases, books had to be returned by the deadline to make the cost savings worthwhile. The online alternatives were substantially better than buying the book from the college bookstore and selling it back to that bookstore at the end of the semester. In a test using a different book, Chegg had the lowest price, while other firms did not even carry the book. Textbooks.com, according to the report, does not offer buyback chances to all books it sells.