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Can Schoolpop Make a Bundle as a School Booster? The site uses "cyberscrip" to give school budgets a cut of e-commerce. Now parents may not be able to resist shopping on the Web One of the prevailing e-commerce mantras is that traditional middlemen are margin-gobbling dinosaurs that consumers should view as the enemy. By streamlining ordering and distribution via the Web, e-tailers promise consumers better, more convenient Web-based service for at least comparable traditional retail prices. But in a cluttered Menlo Park (Calif.) office right off San Francisco Bay, startup Schoolpop.com is betting it will make a bundle by creating a new type of middleman for e-commerce transactions that consumers will not simply tolerate but actually embrace -- even evangelize. The reason: For-profit Schoolpop.com's strategy, in a nutshell, is to become the e-world's sugar daddy for education.
What's in it for e-tailers? Plenty. Schoolpop works like an Internet version of scrip -- the paper gift certificates that have become a mainstay of K-12 fund-raising. With traditional scrip, brokers arrange for gift certificates from retailers and sell them to schools at a discount. Parents simply pay face value for the scrip. The retailer gets guaranteed sales, and the school gets a few percentage points of return for every dollar spent. Scrip sales are now routinely raising tens of thousands of dollars for many schools, and the hope is that the Net will help boost the take. Schoolpop's version of scrip -- cyberscrip -- is catching on at schools across the country. Banners for "schoolpop.com" are lashed all over Silicon Valley schools' chain link fences and parking lots this fall -- and appear more than 7,000 schools nationally. That's about 6% of the nation's K-12 schools, and Schoolpop says the number of member schools is growing at 1% per week. Amazon.com provided inspiration for the idea. Rea Callender, a former southern California science teacher, conceived of Schoolpop last winter, after he heard about Amazon.com's affiliate program, which promises a return to any site that puts the Amazon.com link on its Web page. Hundreds of online retailers have copied Amazon's model, offering rebates to any site that refers business to them. "I woke up in the middle of the night, and I thought: 'Why not go out and collect every affiliate program out there, and then aggregate the buying power of parents?'" says Callender. Investors like the idea. After an initial $1.2 million angel round of financing, Schoolpop.com got an additional $6.25 million in August from venture capitalist Bud Colligan of Accel Partners. "What's unique is that instead of appealing to the greed of people or personal cost-effectiveness to an individual from e-commerce, we're appealing to the desire of people to have better schools," he says. MORE BATS AND BALLS. How needy are schools for these extra funds? Many have already come to rely on scrip sales to patch up budget holes. "Our tuition does not cover the cost of educating the children," explains Kathy Pompili, a member of the school board at Menlo Park's private Nativity School, which used its $25,000-plus dollars from scrip proceeds last year for such critical needs as making teacher payrolls and emergency repairs, and cyberscrip could boost that sum considerably. It's too early to get a handle on just how much cyberscrip can add to the take because disbursements are made quarterly and Schoolpop's program and others like it have just begun the school year. But hopes run high. At public schools such as Palo Alto's Gunn High School -- where budget cuts have pinched the sports program -- there's hope that Schoolpop-generated funds will help boost the bat and ball budget, says Peggy Esber, Gunn's scrip coordinator.
Schoolpop is learning what schools need to make all this work better and is hustling to add other features -- such as a calendar with everything from PTA meetings to soccer practice schedules to early dismissal days -- that would make parents hang around. Schoolpop hopes that as site traffic grows, it will also be able to reap advertising dollars from e-tailers, as well as continue to drive online sales. And down the road, if the cyberscrip model works for schools, Colligan says, Schoolpop may extend the concept to other nonprofits, including churches and possibly universities. "LIKE RECYCLING." The Schoolpop.com model has rivals, though. Schoolcash.com, based in Florham Park, N.J., for example, debuted just before Labor Day, with a virtually identical program. Founder and CEO David I. Greene is putting the hard sell on schools by offering a few percentage points more rebate than Schoolpop on some e-offerings. Other variations include programs such as San Mateo (Calif.)'s eScrip Inc., which has parents register their credit and debit cards and then distributes some share of the purchases made in person from those cards at participating retailers, including grocer Safeway, Eddie Bauer, Budget Rent a Car, or even American Airlines. Too much competition? Callender doesn't think so -- yet. Even though nothing stops a school from registering with all of these programs simultaneously, Callender says the key for these sites is forging a relationship with individual schools and giving them posters, fliers, and other marketing support to help steer parents their way. "It's like recycling," he says. "You now feel a little guilty if you throw a can away in the garbage. We want parents to feel guilty if they don't go through our site." If Schoolpop and this new ilk of kinder, gentler middlemen can capture just a fraction of the multibillion-dollar windfall from e-commerce this year, schools will benefit greatly -- and so will the middleman's reputation.
Hamilton writes Business Week's Digital Dispatch column on Silicon Valley.
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 Schoolpop.com banners can be found all over Silicon Valley WEB POINTERS To try the sites mentioned in this story, click here: Schoolpop Schoolcash eScrip Amazon Dell Computer J. Crew Safeway Eddie Bauer Budget Rent a Car American Airlines | ||||||||||||
