ShutterstockAustralian online retailer Booktopia has been sold to Australian online electronics store digiDirect – saving the business whose sales made up 54.7% of Australia’s online bookselling market. (Booktopia’s closest competitor, Amazon, made up 11.1%.)
Booktopia’s reprieve means Australian readers, writers and publishers will continue to have a significant local champion for Australian voices.
Through the sale, digiDirect gains the Angus & Robertson and Co-op brands (the latter sells textbooks to Australian university students), around A$14 million of inventory, and a large pool of monthly active customers.
The new owner, Shant Kradjian, told the Australian Financial Review he intends to immediately invest millions of dollars into rejuvenating the company’s inventory. “The Booktopia infrastructure and systems are very good, and we believe that with some investment and the right team and strategy, we’re well-placed for growth,” he said.
Taking on debt
Booktopia entered voluntary administration in July this year, after accumulating debts of around $60 million.
The majority of that debt is owed to suppliers (primarily book publishers), with $12 million in unfulfilled customer orders and $3 million owed in gift cards. The new owner will reportedly offer “special arrangements to customers with unredeemed gift cards”.
Despite opening a new high-tech warehouse last year and celebrating its 20-year anniversary in February, Booktopia had been unravelling. Behind the scenes, creditors had been stopping and starting their trading relationships, as invoices became overdue or were paid late, and investor confidence plummeted along with the share price.
In June, there was the highly public departure of the CEO and a mass redundancy of 50 staff. Since trading halted altogether, the book industry has been waiting to see if the beleaguered company would collapse entirely.
A relief, but still some concerns
The announcement of a new owner has several immediate upsides. With solvency assured, Booktopia can now resume trading. Even though the as-yet-undisclosed sale price does not cover the company’s current debts, reactivating operations reanimates the business’s revenue stream, which may bring relief for publishers who’ve supplied stock and customers with outstanding backorders.
All current staff will be retained and there are plans to recruit an additional 100 staff, potentially including some laid off two months ago. And the fact that the new owner is an Australian company bodes well for a continued focus on promoting titles by local authors.
However, shareholders will not see any returns from the sale and the company will still need to pay a $6 million fine for making misleading statements to customers about their consumer rights. Some have also raised eyebrows about previous sales and marketing practices that included listing out-of-stock titles for sale.
Booktopia closing would have been ‘BAD’
Robbie Egan, head of the Australian booksellers industry body, Book People, suggested earlier this month that “brick-and-mortar independent bookshops” could “get more customers” if Booktopia left the market. But, he continued, “You never want to see a large operator go out of business like that because a lot of people are affected, a lot of people lose jobs, and Australian writing and publishing is affected.”
For the broader book trade, the survival of a competing retailer might seem like a negative. Some bookshop owners have said they were “not sad” about Booktopia’s likely demise.
But, really, few want to see a repeat of the 2011 demise of REDgroup, owners of Angus & Robertson, the Australian Borders megastores and the Whitcoulls chain of newsagencies in New Zealand. Combined, they represented around 20% of the Australian book market.
When a swathe of Borders and Angus & Robertson chain stores closed due to failing financial performance, many hoped their customers would migrate to alternative independent bookstores instead.
Publishing consultant Malcolm Neil had already left his job as group communications director for REDgroup when the company crashed. Recently, he shared his belief REDgroup’s combined book sales in Australia “disappeared” after its demise, rather than migrating to other Australian retailers. He continued: “Reduced sales = reduced publishing = less opportunities for authors and readers. Booktopia closing is a BAD THING.”
The ABC recently reported Booktopia had been selling $200 million in stock a year (though it also reported some publishers dispute the figure).
A lean industry that needs support
If Booktopia had failed, customers who looked for a new online book retailer would likely find themselves turning to Amazon, one of the world’s largest online retailers. It offers more than 30 million book titles for sale (across both print and ebooks), sells more than 300 million print books per year and controls at least 40% of print book sales in the United States and over 50% of the United Kingdom book market.
Since Amazon launched in Australia in 2017, local retailers have sought to maintain market share by offering more tailored customer experiences and a more curated selection of titles, with a focus on Australian authors. That’s what we need to continue focusing on, for the long-term survival of the industry and Australian book culture.
Book publishing in Australia is a lean industry, fuelled by passion more than profit. While everyone involved – from writers to publishers to retailers – wants to build a thriving industry, we also want to build a thriving reading culture. In particular, we want to hear and share Australian stories with Australian readers.
So, in an already crowded content market and competitive retail environment, every outlet, platform or channel to readers is a toehold in the market worth fighting for.
Sharon Mullins does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.