Australian online retailer Booktopia has been sold to Australian online electronics retailer digiDirect, saving the company whose sales accounted for 54.7% of the Australian online bookselling market. (Booktopia’s biggest competitor, Amazon, accounted for 11.1%).
Booktopia’s reprieve means Australian readers, authors and publishers will continue to have an important local advocate for Australian voices.
The sale gives digiDirect the Angus & Robertson and Co-op brands (the latter sells textbooks to Australian university students), inventory valued at around A$14 million and a large pool of monthly active customers.
The new owner, Shant Kradjian, told the Australian Financial Review he plans to immediately invest millions of dollars in renewing the company’s assets. “Booktopia’s infrastructure and systems are very good and we believe that with some investment and the right team and strategy, we are well positioned for growth,” he said.
Diego Fedele/AAP
Get into debt
Booktopia filed for voluntary bankruptcy in July of this year after accumulating debts of approximately $60 million.
The majority of that debt is to suppliers (mainly book publishers), with $12 million in unfulfilled customer orders and $3 million in gift certificates outstanding. The new owner will reportedly “offer special arrangements to customers with unredeemed gift certificates.”
Although Booktopia opened a new high-tech warehouse last year and celebrated its 20th anniversary in February, it was in crisis. Behind the scenes, creditors were cutting and re-cutting, bills were overdue or late, and investor confidence was falling, along with its share price.
In June, the CEO resigned in a high-profile manner and 50 employees were laid off. Since the complete halt in trading, the book industry has been waiting anxiously to see whether the ailing company will collapse completely.
A relief, but still some concerns
The announcement of a new owner has several immediate benefits. With solvency secured, Booktopia can now resume trading. Even though the as-yet-undisclosed sale price will not cover the company’s current debts, the resumption of operations revives the company’s revenue streams, which could provide relief to publishers who have delivered stock and customers with outstanding reorders.
All current staff will be retained and there are plans to hire another 100 staff, possibly including some who were made redundant two months ago. And the fact that the new owner is an Australian company suggests that the publisher will continue to focus on promoting titles by local authors.
However, shareholders will not make a profit from the sale and the company will still have to pay a $6 million fine for making misleading statements to customers about their consumer rights. Some have also raised eyebrows over past sales and marketing practices that have seen out-of-print titles offered for sale.
Closing Booktopia would have been “BAD”
Robbie Egan, chairman of Australian book trade association Book People, said earlier this month that “brick-and-mortar independent bookshops” could “gain more customers” if Booktopia left the market. But he added: “You never want a major bookseller to go out of business like this because a lot of people are affected, a lot of people are losing their jobs and Australian literature and publishing are affected.”
For the book trade in general, the survival of a rival retailer could seem negative. Some booksellers said they were “not sad” about the likely end of Booktopia.
But few want to see a repeat of REDgroup’s demise in 2011. REDgroup, owner of Angus & Robertson, Australia’s Borders megastores and the Whitcoulls chain of newsagents in New Zealand, together represented around 20 percent of the Australian book market.
When many branches of the Borders and Angus & Robertson chains closed due to poor financial conditions, many hoped that their customers would switch to other independent bookstores instead.
Publishing consultant Malcolm Neil had already left his job as head of group communications at REDgroup when the company collapsed. He recently shared his belief that all of REDgroup’s book sales in Australia “disappeared” after the company’s demise, rather than migrating to other Australian retailers. He continued: “Lower sales = lower publications = fewer opportunities for authors and readers. Closing Booktopia is a BAD THING.”
ABC recently reported that Booktopia sold $200 million worth of stock annually (although it was said that some publishers disputed that figure).
A lean industry that needs support
Had Booktopia failed, customers looking for a new online bookseller would likely end up at Amazon, one of the world’s largest online retailers. Amazon offers more than 30 million books (both print and e-books) for sale, sells more than 300 million print books annually, and controls at least 40 percent of print book sales in the United States and over 50 percent of the UK book market.
Since Amazon launched in Australia in 2017, local retailers have sought to maintain market share by offering more personalised customer experiences and a more curated selection of titles, with a focus on Australian authors. This is something we must continue to focus on if we are to ensure the long-term survival of the industry and Australian book culture.
Book publishing in Australia is a lean industry, driven more by passion than profit. While everyone involved – from authors 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.
In an already crowded content market and a competitive retail environment, every outlet, platform or channel to readers is an important part of the market worth fighting for.
