Chegg Maintains Student Brand, Owns Customer Relationship and Data, Leverages Ingram’s World-class Logistics, Inventory Management and Network of Warehouses
Santa Clara, Calif. – Aug 4, 2014 – Chegg, The Student Hub, today announced a significant strategic alliance with Ingram Content Group Inc., the world’s largest distributor of books.
Key elements of the alliance include Chegg continuing to own the customer experience, including catalog, end-user pricing, marketing, customer support, ongoing student relationships and data. In addition, Chegg and its brand partners will continue to deliver surprise and delight to students with the products found inside of Chegg-branded boxes, which Ingram will use to fulfill orders.
Ingram will be responsible for the sourcing, warehousing, fulfillment, shipping and rental returns of their inventory and Chegg will receive a commission for textbooks rented or sold through its web and mobile sites, recording such commissions as digital revenue.
Chegg has already begun transferring ownership of a combination of current and new inventory to Ingram in anticipation of textbook volume for the upcoming fall semester. Chegg expects this will result in a substantial reduction in net cash expenditures on textbooks in Q3 2014 and in the second half of 2014.
Chegg and Ingram expect to continue migrating inventory ownership over the next several academic semesters, further reducing Chegg’s use of cash on print textbooks. Chegg expects this to strengthen its balance sheet and cash flow.
“We continue putting students first, reinforcing our direct relationship with them and accelerating our transition to digital revenue,” said Dan Rosensweig, chairman and CEO of Chegg. “By leveraging Ingram’s world-class logistical capabilities, this alliance allows Chegg to maintain all of the advantages of brand, customer acquisition, marketing and data from the print textbook business, while freeing up significant cash.”
“This is a long-term strategic growth opportunity,” said John Ingram, chairman and CEO of Ingram Content Group. “Together, we will improve service and delivery speed for Chegg’s students through the combined forces of Chegg’s consumer brand and reach, and our expertise in distribution and logistics.”
Chegg will discuss this agreement in more detail on its earnings call today, August 4, 2014, at 2:00 p.m. PDT (5:00 p.m. EDT). A live webcast of the call will be available online at http://investor.chegg.com under the Events & Presentations menu.