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Booktopia co-founder and c.e.o. Tony Nash, who will be interviewed as part of this year’s FutureBook Conference, discusses how he spotted a gap in the online retail marketplace, and helped Australian publishers resist Amazon.
In August the Australian online bookseller Booktopia reported that it had smashed forecasts for its full year, with sales up 35% to AUS$223.9m (£122m), and underlying profits up 125% to AUS$13.6m. Under its co-founder and c.e.o. Tony Nash (pictured right) the business is reaching for AUS$1bn in sales—including AUS$500m from its domestic market and AUS$500m from overseas, and is looking for acquisitions in both areas.
The results were its first since listing on the Australian Securities Exchange (ASX) in early December 2020. This follows a remarkable growth record for Booktopia since its founding in 2004 by Nash, his brother Simon Nash and chief commercial officer Steve Traurig (who is also Tony Nash’s brother-in-law). It has been at the forefront of a revolution for book retailing in Australia that has seen the business overhaul the local competition and fend off the launch of Amazon in the country in 2017.
Like many outsider innovators in the book space, the plain-talking Nash says he spotted an opportunity those embedded in the sector were just not willing to grasp. Before Booktopia, Nash ran an internet marketing business, and before that an online recruitment business. In the first activity his trick was to figure out how to get his business to the top of the Google search results; for the latter role he specialised in “solutions selling”—establishing a customer’s need and then fulfilling it.
He launched Booktopia after a stint working with what was then the leading high street chain in Australia, Angus & Robertson, to improve its online rankings. A&R’s website was run by a third party which at that time also operated a number of bookshop websites, and Nash pitched his marketing solution to it. Although the company knocked him back, by lifting the hood on how established bookshops sold titles online, Nash spotted his opportunity. “They explained how it worked: that you could launch a site and within a few minutes have one million books available for sale. I went back to my brother and said, ‘I wouldn’t mind giving that book thing a go’.” So on a budget of AUS$10 a day and working in the evenings, the Nash brothers gave it a go.
Tony Nash knew how to drive traffic to the site, while his recruitment background told him to focus on customer needs, in this case readers: sales were initially driven by backlist and bestsellers, i.e. what customers wanted to buy, as opposed to the frontlist, which is what publishers wanted readers to buy. “When I thought of good bookstores, it’s when someone walks in and is asked, ‘What would you like to read?’ That’s adding value. As a recruiter, it is about solutions selling—talking to the customer and finding out about their needs.”
A second push came after he attended the Australian Booksellers Association’s Annual Conference in the mid-Noughties. “I’m standing there and thinking that these people know nothing.” So Nash went all in, building a dedicated website with its own fulfilment facility to improve turnaround speed. “There was nothing [else] that was focused on the customer the way we focused on the customer, the reader, and we just kept on that.”
Milestones came and went, though it took publishers a while to spot Booktopia rising on their radar. “We had gone from nothing to AUS$2m [revenue], and I thought surely publishers would be thankful. In my past business it was relationships-based—you would have dinner, play golf. Here there was nothing. No Christmas hamper.”
But as the business grew, so the relationships slowly changed, with the “castle walls coming down”. That’s not to give the impression that Nash is giving up on the banter. “It’s an old and established industry and it has been hard for some to understand the new world. It’s been so many years of them catching up. There is definitely progress, though,” he says.
He would still like publishers to work strategically with Booktopia, and perhaps as a nudge in that direction he has recently got into publishing. Booktopia will aim to publish 100 books over its next financial year via its own publishing unit; it has also inked a deal with Welbeck, taking a 25% stake in the London-based publisher’s new standalone subsidiary Welbeck ANZ, with a AUS$3m investment in the company.
Nash is now looking overseas for opportunities, but most likely in distribution rather than retailing, as he seeks to quadruple his firm’s size. The flotation has given the company capital and the ability to raise more finance if the opportunity arises. “The more we have got into publishing and distribution, it has shown the inefficiencies, and the carbon footprint is quite high. So we will be looking into both. The board is more interested in the big deals than small ones.”
I couldn’t think of anything worse than waiting for a customer to walk through the front door
At 25% of the Australian books market, Nash also believes its online operation may eventually reach a ceiling. Would he consider opening a physical store then? “I hope not... I couldn’t think of anything worse than waiting for a customer to walk through the front door. The biggest book retailer in Australia ever was AUS$330m [revenue] and that was when A&R and Borders were combined under RedGroup, before it went bust. So at AUS$500m, we’d be in a quite a dominant position in a market that is worth AUS$2.6bn. That would be as much as we are going to get to as an online retailer, so we may look at it then. But there is a lot to it that is unappealing to me.”
He is similarly circumspect about digital, though Booktopia sells e-books and audio titles in partnership with Rakuten Kobo, he does not see this as a threat. “During the investor roadshows, we did get asked a lot about digital, so in the end, I just said, ‘Lets do a global experiment where we ask everyone to stay at home, but they can still shop online, and they can order physical books overnight or digital in eight seconds.’ In other words, here was the moment for digital to take off, and it didn’t. So I said to them, ‘The experiment is over.’”
As for publishers, Nash says they now see the value of Booktopia beyond just its sales. When Amazon launched on the ground in late 2017, Nash says its trade negotiators were initially pretty bullish. “Amazon was ruthless, and the publishers said, ‘You can get lost, we’ve got Booktopia.’ The publishers told me they enjoyed it.”