WEST HAVEN -- Truth be told, a bad economy is good news for CampusBookRentals.com.
"We cater to people who need education and want to spend less money," says Alan Martin, company CEO and founder. "Renting textbooks was perfectly aligned with people in a recession going back to school."
When Martin launched his business in 2007, the economy was good. But a year later, it turned bad. Martin calls the scenario serendipitous for his business, which now employs more than 130 local workers. "We've grown 8,000 percent as a company in four years," he says.
In 2008, the company cleared $278,000 in rental revenue.
Last year, the business cleared $23 million.
The company just landed spot No. 17 on the 2012 Inc. 500, which profiles the fastest-growing companies in America over the span of four years. The listing means that, between 2008 and 2011, the company was the 17th-fastest-growing company in America.
The magazine also named the company as the fastest-growing in the education industry nationwide.
CampusBookRentals.com was also selected by Forbes Magazine as one of the country's 20 most promising companies.
Last spring, Martin was named as the 2012 Ernst & Young Utah Region Entrepreneur of the Year in the retail and consumer products category.
Martin says most books rent for 50 percent or less of their used or new retail price. "Our average rental price is about $42."
CampusBooksRentals.com also sells millions of textbooks that reach the end of their life cycle, but those sales generally don't bring in a profit, he says.
"We've had a significant growth, and it continues," Martin says.
He attributes the latest growth spurt to establishing a CampusBookRentals.com presence inside campus bookstores, which he began doing in 2009.
"We are under the label of the bookstore, so people don't know it's us," he says, noting that such rentals have exceeded the growth of Internet rentals because of the convenience to students.
"They need their book," he says. "That's why we want them to take it immediately. ... We want the campus bookstore to be the good guy."
Martin says 80 percent of customers who order online can have their books in two or three days.
CampusBooksRentals.com currently serves more than 1 million students from little-known community colleges to top-name universities.
Martin says the key to his operation comes from learning about, and understanding, the economics of textbooks and the way they behave like any commodity.
"They have points in their life and points throughout the year when they are worth more and less, based on supply and demand," he says.
"The economy had a huge impact on our business because education is countercyclical," Martin says.
"When the economy is down, education is typically up. In our case, when we entered the recession, many more people went to school. Not only did they just go to school, they looked harder than ever for cost savings."
He says the life of a typical textbook usually is about three years.
"Textbooks are not that much different than other commodities."
But understanding how to make a profit renting rather than selling requires study of a fairly complex set of data, Martin says.
"There are over 1,900 categories to look at alone -- the amount of people looking for the book online, the book's age and a host of other information that informs us on how well the book will perform over the balance of its life," he says.
More than 4 million titles can hit the company's system, Martin says.
"There's seemingly no end to the study of books," he says.
"It's a lot of trial and error and learning as much as we can with as much data as we can. We lose money on some books, but across all of them, overall we are right."
The business recently added gravity feeder shelves that allow workers to rotate levels up and down, making room to stack books even higher in the business's 57,000-square-foot facility.
"We can get about 2 million books in this building after we add the second level (of shelves)," Martin says, referring to an extra story that can now be filled with books as the racks rotate up and down.
"Hopefully, we can hold our growth."
At the heart of the business are bright-pink pre-paid return shipping envelopes.
Martin says the color helps students keep track of the envelopes and mail their books back in a timely manner so they can be rented again for the next semester.
If the books are late, students receive a series of penalty charges until they own the book.
Martin says the company gives renters a free 15-day grace period to get the book back.
Once it's past that, a two-week rental fee is charged, which is about 20 percent as much as the initial rental.
If the book is still not returned, the company charges again in about two-week intervals until the renter has been charged enough to pay for the book.
Martin says his company requires credit card information to be on file, so late charges can be applied if the books aren't returned.
"Students are great, and we get most books back," he says.
The credit information also comes in handy when books are damaged.
But that doesn't happen often. However, Martin says one student recently destroyed a textbook by mailing a banana with it.
"She totally accidentally packed her banana that she had there to eat," Martin says. "There's plenty of funny stuff that goes on that way."