Randall White, President and CEO of Educational Development Corporation (NASDAQ: EDUC) reports that since severing ties with Amazon (NASDAQ: AMZN) in February of 2012 they have totally replaced the 20% of their business — $2 million — that used to come from Amazon, because of the support they received from their retail accounts. In October, he notes, the publishing division recorded its largest sales month.
“We think the Home Business Division, now that we’re more supportive of them and they’re not being undercut in price, can have growth, and actually we have just recorded five consecutive months of growth over the same period last year in that division,” says White.
But is this growth sustainable given consumer demand for e-books and purchasing online? “Time will tell,” notes White, adding that they have their own Internet presence with 7,000 sales consultants who have their own websites that EDC provides for them.
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The company’s home sales consultants are also getting into creating virtual home shows on Facebook (NASDAQ: FB). They call them Facebook Parties, where participants are all on social media sharing the books instead of meeting in someone’s home. In the past couple of months this has started to be a significant business for the book publishing company.
They are also in the e-book marketplace through the e-books that are available on their website and their 2011 investment in Demibooks, a company that has created apps of several of EDC’s books for the iPad. So far this business hasn’t been very profitable for EDC, the apps particularly; the e-books are very profitable, notes White, because it’s very inexpensive to make an e-book.
White believes that growth can come from the home business division if they can make the playing field level and prices are not being undercut. “We are not going to undercut our business, either the retail customers or the home business division,” he says, “so we don’t sell to high-volume, low-margin operations like Costco and Amazon.”
“We had a five-year decline in the home business division and to have five months up is very encouraging,” adds White. “So we think it’s all based on the strategy of trying to be supportive of the sales force and not being undercut, and we think that’s going to grow, and I’m excited about that. And by the way, I’m the largest shareholder and I haven’t sold my stock. So buyers can make their own choices about that, but I think this upcoming year is going to be better for us.”
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