Readers are burnt out on e-books — and Amazon can’t rekindle the magic.
That’s according to the head of Australia’s third-largest bookstore, who has declared victory in the David-and-Goliath battle after his sales skyrocketed by 50 per cent since Amazon’s arrival Down Under.
“People gave it a go and realised, ‘It’s not for me’,” said Booktopia co-founder and chief executive Tony Nash. “People’s e-readers are sitting in the cupboard next to the bread-making machine and fondue set.”
Mr Nash, who started the company 15 years ago with just $10, is happy to take a swipe at the pioneer of the e-reader. Prior to Amazon entering the Australian market, many experts predicted it would lead to the demise of Booktopia.
“When Amazon first arrived in 2016 our revenue was $80 million, last year we did $113 million and this year we’re heading towards $130 million,” he said.
Booktopia now accounts for 14 per cent of Australian book sales and is the country’s biggest online bookseller. It sells one book every six seconds — 5.5 million this year — and has more than 1.8 million repeat customers.
“It was a very simple beginning,” said the former computer programmer.
“There was no plan or vision. I worked on it in the evenings. My brother wrote the sales forecast plan, it was like ‘one sale a day for the first three month, two sales a day for the next three months’. We obliterated that. Before we knew it we ended up with this $2 million online store.”
With revenue of about $180 million, Big W is the country’s biggest bookstore followed by Dymocks and then Booktopia. With up to one-third of Big W stores tipped to close, Mr Nash doesn’t think the department store will hold onto number one.
“My goal right now is to get to $200 million as soon as I can,” he said. “I think $500 million in Australia is as much as we can get to (before expanding overseas).”
E-books, however, make up a tiny fraction of Booktopia’s sales. “E-book (sales are) small for us, really only around 1 per cent,” Mr Nash said.
“E-books are declining around the world, including Amazon. Sales are really not going to be as big as everyone thought they would be.”
He attributes that partly to screen overload. “They say, ‘I have too much screen time, I want to shut down my phone, shut down my computer, I just want to sit down with a book’,” he said.
“It’s a very different entertainment experience and process. That’s part of it. The other thing is that a lot of e-books are self-published authors and just the quality of the book is not as good.”
Data from the American Association of Publishers show e-book sales between January and October last year were 3.1 per cent lower than the same period in 2017.
While e-book sales for the month of October edged higher, the long-term trend has been down. In October 2014 e-book sales were $US126.6 million, compared with $US87.1 million in October 2018, a 31 per cent decline.
The figures are similar in Australia, where PwC expects sales of e-books to fall 31 per cent from $204 million in 2017 to $140 million in 2022.
Amazon declined to provide a statement in response to Mr Nash’s comments.
It’s understood, however, that Amazon Kindle sales and e-book sales volumes have increased every year since the e-reader first launched 10 years ago.
“It mostly comes down to the fact they’re selling books for $1.99 or one pound, therefore the volumes are there but (the revenue isn’t),” Mr Nash said.
‘HOW WE BEAT AMAZON’
Mr Nash believes Amazon’s failure to seriously dent the Australian book market comes down to the company spreading itself too thin.
“In the beginning books were 100 per cent of Amazon’s revenue, today it’s 5 per cent and it’s getting less and less important,” he said.
While Amazon has traditionally been “very good at taking out an incumbent”, a strategy immortalised in Jeff Bezos’ phrase “your margins are our opportunity”, Mr Nash points out that Amazon has been selling books for 25 years.
“They are the incumbent,” he said. “As the incumbent they’re not very good. They have moved onto bigger and better things, books are becoming less and less of a priority.”
Before Amazon came to Australia, Mr Nash looked at other countries where the e-commerce giant was already mature to see which companies were flourishing.
“What I observed is Amazon is everything to everyone, and if you are you can’t be one thing to one vertical,” he said.
“The ones succeeding focus on one vertical and do it really well. I thought, we have to go even deeper into books. That gave me a lot of confidence and clarity about our tactics. I wasn’t nervous or concerned.”
For Booktopia, going “deeper into books” means holding more stock, improving the website and bringing on book experts for the marketing team.
Booktopia is currently in the middle of a $10 million equity raise through crowd-funding investment platform Equitise. Aussies can buy into 8.1 per cent of the business at $1 per share, with a minimum investment of $250.
Mr Nash wants to expand the range from 150,000 titles to 200,000 and invest in more automation for the company’s 13,000sqm warehouse near Sydney’s Olympic Stadium.
“We’re inbounding and outbounding 30,000 individual books a day, soon it will be 60,000, then 90,000,” he said. “We’ve got to meet the needs of customers but invest to ensure we don’t have to throw more and more people at it.”
Despite the increasingly digital world, Mr Nash believes the future for physical books “more than ever” is looking bright. “It’s been very, very stable,” he said.
“When times are good people like to escape with a book, when times are tough they need to self-educate. Books are a great gift. There will be a book for somebody, whatever they’re interested in, at any price point.”