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Student Turning Used Texts Into Bestsellers : Entrepreneur: Ken Appel just wanted to save on his schoolbooks. Instead, he started a thriving business.

November 08, 1989|ANTHONY MILLICAN

Four years ago, college student Ken Appel decided to practice what most of his classmates were still learning about in business school: entrepreneurship.

Frustrated with high prices at university-run bookstores, Appel figured that universities were making huge profits on textbook sales and he could still make money by selling books for less. So, he borrowed $2,000 from his father, subleased space in a vitamin store close to UC San Diego and opened KB Books.

The store, which has since moved to its own College Avenue location at the San Diego State University campus, has grown dramatically. Appel, 26, expects sales to reach $1 million this year, up 25% from last year. KB Books has grown at least 20% per semester and now claims 10% to 15% of the SDSU textbook market, Appel said.

KB Books does sell new books, but used texts account for 70% of its sales, Appel said. KB's prices usually are 7% to 10% less than those at SDSU's Aztec Shops.

The store's success can be linked to a nationwide surge in the used textbook market, industry experts say, as college students rebel against skyrocketing textbook costs.

The total U.S. market for used college textbooks rose to $521 million in the 1987-88 school year, the last year for which figures are available. That's a 12% increase from 1986-87, when the number was $459 million, said Hans Strechow spokesman for the National Assn. of College Stores, a trade group based in Oberlin, Ohio.

"The used book market is growing and it will (continue to grow) for a while," Strechow said. Combined new and used book sales, which in recent years have grown roughly at the rate of inflation, were $2.6 billion in 1988-89, Strechow said.

Appel is not the only bookseller in recent years to see an opportunity to break university monopolies on text sales. Of the 2,800 member stores in the National Assn. of College Stores, about 300 are private, off-campus operations similar to KB Books, Strechow said.

The private stores are typically "mom-and-pop" operations that set up shop near larger, university operations. Although some campuses have only one university-run textbook store, others have as many as five competing private textbook stores. The stores themselves range from department store-sized operations to specialty shops.

That private stores have been able to find a niche in the college market has not been surprising, Strechow said.

"It's simply price," he said. Students "want to save as much as they can so they'll have money to go to movies and other things. They don't mind a few notes in the margins. In fact, I think they might even like them. Twenty years ago students bought new textbooks and kept them. Now, a textbook will be obsolete in two years, so why keep it?" Strechow said.

Before Appel opened KB Books, Aztec Shops had been the only textbook store serving the SDSU campus for about 10 years. Appel said one reason for his store's success is that students took to the "underdog" aspect of KB's competition with the university store.

"People like dealing with people their own age rather than someone they might perceive as being unsympathetic," Appel said. "I try to run my business on as personal a level as I can. I have a better idea of what it's like to be at the other end of the counter."

Appel, who graduated from UC San Diego in June with a bachelor's degree in management, originally started his operation on a part-time basis in 1984, operating out of a friend's apartment. His original goal was simply to buy his and his friends' books at lower prices than those at UCSD.

Appel and a couple of friends took out a business license as a bookstore so as to buy books at publishers' wholesale cost.

"I was like any other student having to shell out a lot of money for books," he said. "We thought we could get our own books for less and then our friends', and then our friends' friends. It was a small-scale operation at first. People would order and we would deliver to their dorms."

But the operation grew so fast that Appel soon realized he had the nugget of a good business idea. In early 1985, Appel subleased space in a vitamin store close to UCSD. The store went far beyond Appel's expectations.

KB Books found a permanent location last year about a half-block from the campus. The 12,000-square-foot bookstore now sits in what used to be a campus pub and eatery. "We had to remove an overhead grill and a few other things just to get more room," Appel said.

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