In the past few weeks, more than 22 million college students went back to college in the US. That's more students than ever before, but sadly, these students face higher average student debts than all of their predecessors (now almost $40,000!). In addition to the rising cost of tuition, the average student now spends up to $1,200 a year on textbooks.
For students looking to cut costs, even buying used books from the campus bookstore is an expensive proposition, while selling books back to the bookstore yields pennies on the dollar. Students know they get the best deals when they are able to cut out the middleman to buy and sell textbooks as well as other products and services.
This is where Locolist, which bills itself as Your Campus Craigslist, comes in. Founded in 2015 by students from Purdue University and Arizona State, Locolist is a private app that enables college students to easily buy or sell products and services to one another on campuses around the country.
Much like the early days of Facebook, the app is private, requiring students to sign up using their ".edu" email addresses to ensure that only verified students are included. This addresses some of the safety concerns students face when meeting strangers through Craigslist or open Facebook Groups, which are Locolist's primary competition.
For students who don't find a buyer for their products on campus, Locolist has a trade-in partnership with Amazon.com, enabling students to trade-in used textbooks for up to 80% of their original value. They can do this with Locolist, without having to sign up as a seller themselves or wait for a sale to go through. In addition to textbooks, students can trade-in video games, DVDs, used smartphones, and even laptops. Over 1 million items are trade-in eligible at Amazon.
The app is currently free and is being used by approximately 100,000 students at 200 colleges nationally. It is also growing by about 10% month. Ron McInnis, one of the cofounders of Locolist, expects that rate to increase faster when they raise a $3 million seed round but recently turned down larger investments offers as they are hoping to gain more traction before raising money at a better rate.
The company earns 8% revenue on its Amazon trade-ins. With a $200 dollar projected trade-in "value per student," it's easy to see how they can afford to wait to raise money. That said, they plan to generate revenue, as McInnis notes: "from brands and retailers who want to place deals and promotions in the app. Since the students in our user-base are all Millennials, we know there are a lot of companies that want better ways to reach them. We have turned down ads and promos up to this point, but we will be adding them shortly."
In the meantime, the team has been focused on adding features, such as the recently-launched "Chit Chat" function that, in the words of the founders, "takes the app beyond commerce, by enabling students to connect on campus and create real relationships. We believe with the addition of Chit Chat, we will see faster growth and an increase of daily active users."
It looks like Locolist is a company that's on track to create a win-win proposition for students and investors alike.