CEO Corner

This was our busiest spring at Sequoia for as long as I can remember. Starting with CAMEX 2009, our first Virtual User Group Meeting, numerous new sales, and a massive new credit security release, we have been working in overdrive.

Although some reported that CAMEX 2009 in Anaheim was slow, we experienced steady and consistent traffic. The Sequoia booth had more attendees than almost any CAMEX of the past five years. This was better than expected for a west coast event that does not traditionally draw many of our customers from the east cost. It was great to see so many good friends.

Our first Virtual User Group Meeting was a success. We had 172 bookstore customers participate in the 3 days of sessions. This was more than our busiest on site User Group Meeting and far more than the 45 to 55 customers who could have been expected to attend an onsite User Group Meeting this year. Still, we missed the face to face interaction and are considering alternating virtual UGMs with a live event.

At CAMEX 2009 and at our Virtual User Group Meeting we featured three new products.

Tokenized Credit

First, we revealed our new credit card architecture which we are releasing next month. This new structure takes all credit card numbers out of your store and moves them immediately to your credit processor. This relieves you and your staff from most of the headaches associated with credit card system auditing and the exposure to liability from system incursions. While the credit card industry is imposing massive changes on merchants by July 2010, Sequoia customers will have the assurance of knowing that their systems are secure a year ahead of schedule.

It seems ironic that as retailing is getting more flexible (we can now reach and sell to our customers almost anywhere, and at anytime) credit security has become correspondingly stricter. The increase in sales flexibility has come with a corresponding increase in vigilance and caution. Banks, processors, and merchants who receive credit information all realize that opening up a business to the world also allows the possibility of access to those who may have ill intentions. Our new line of PCI and PA-DSS certified products will protect our bookstore customers from these hazards and ease stores' own credit security issues.

Bookshare

Our Bookshare products were met with enthusiasm at CAMEX 2009 and we have quickly doubled the number of participating customers. While the product is barely six months old, we have 11 million dollars worth of stock on the site and the number growing daily. I would like to thank our Bookshare pioneers for helping this product continue to grow.

"Sherpa"

We showed Sherpa, the development name for our new GM management application, at CAMEX 2009 and it received a very positive response. This new product gives our customers a new GUI interface and allows them to more easily access information and reports. The first release of this product is in beta. General release is scheduled for this fall. Sherpa contains exciting new features including serial number tracking, sized items, eCommerce interface, and special order functionality.

Finishing Bookshare, Sherpa, and our credit enhancements this spring has created a large surge in development activity. To meet the challenges of the market, we have increased the number of our developers from four to seventeen. Our developers are working in four different countries and on three different continents. This group has produced a prodigious amount of software in a very short amount of time. Coordinating this effort has kept managers Bob Hoxsie, Brian Herlihy, and Dave Eisen working later than ever.

On the sales front, this spring has been our best in five years. We have added two new accounts, representing five new bookstores. This is the busiest quarter we have had since 1999.

This being said, we have not been completely immune form the ailing economy. At our Virtual UGM, 47 percent of our customers reported that they were operating under budget restraints and were unable to make any new purchases this academic year.

Leasing Threat

The current economy has also produced a rash of new leasing activity. In April and May we saw three Sequoia customers leased to Follett and Barnes & Noble. This was more customers leased than we saw in the ten year period of 1997 to 2007. This leads me to ask: Is the current surge of leasing just a response to the lousy economy? Or is it a long term trend? My gut feeling is that it is both. On one hand, it seems that the economy has made some universities desperate for money and getting short term cash infusion by leasing the bookstore may seem irresistible.

On the other hand, I see the long term trend for leasing as continuing. Our stores are faced by challenges posed by digital books and pervasive outside eCommerce competition. These challenges are also affecting leasing companies and wholesalers ten fold.

The demise of the bookstore equates the end of a large component of these companies' business. Shifting their resources into store management makes good sense to them and it gives them a path forward. It doesn't make such good sense to everyone else.

As an industry, this will force us to show that we can independently provide better technology, better service, better management, and better value to our students and other customers. In the current economic climate the bar has been set very high. Based on what I have seen this spring, I believe that my customers are up for the challenge.