Booktopia Group Ltd, an Australian bookseller and publisher, has recently faced significant financial challenges and had to arrange $1 million in emergency funding. The company, which also owns Angus and Robertson, another major online bookseller, publisher, and printer in Australia, has withdrawn its earnings forecasts. Booktopia experienced a loss of $16.7 million for the six months leading up to December 31, 2021, compared to a $3.9 million loss the previous year. Additionally, the company sold 20.6% fewer books and other items during this period.
Booktopia was founded in Sydney in 2004 by Tony Nash, Steve Traurig, and Simon Nash with a budget of just $10 per day. Initially, it operated as a drop shipping business, outsourcing website operations and order fulfillment. However, in 2007, the company built its own website and began shipping its own stock. In 2015, Booktopia acquired the Angus and Robertson business from Penguin Random House. Over the years, Booktopia has received numerous accolades, including winning the National Book Retailer of the Year at the Australian Book Industry Awards in 2016, 2017, and 2019. It has also been recognized as Australia’s favorite bookstore by the public.
Despite its success, Booktopia faced challenges when it entered the digital market. In 2020, the company announced a joint venture with Rakuten Kobo to provide e-books and downloadable audiobooks through the Booktopia/Kobo app. However, the popularity of the Booktopia name did not translate to the app’s success. It currently ranks at number 22 in the “Books” category on the App Store in Australia, while competitors Audible and Kindle hold the top two positions.
Further problems arose for Booktopia in 2021 when founding CEO Tony Nash sold $6 million worth of his shares shortly before the company announced a drop in earnings. This led to investor dissatisfaction and Nash’s resignation. In addition, the Australian Competition & Consumer Commission (ACCC) fined Booktopia $6 million due to misrepresenting consumers’ rights to refunds and returns. As a result, Booktopia’s shares plummeted to 17 cents by June 2022.
In recent developments, CEO David Nenke resigned on June 3, followed by Chief Financial Officer Fiona Levens on May 15. Booktopia also announced the withdrawal of its February earnings guidance, which had previously suggested earnings of $1 million to $3 million in 2023/24. To cut costs, the company plans to make at least 50 roles redundant at its Rhodes headquarters, aiming to save $6.1 million in the coming financial year. Booktopia has secured a $1 million revolving debt facility with AFSG Capital at an 18% interest rate to help cover redundancy costs.
Booktopia’s challenges can be attributed to several factors. The company cites economic headwinds and the soft performance of the Australian book market as key contributors. Additionally, the shift from physical books to e-readers and the decreasing reliance on set texts in universities have affected Booktopia’s sales. These changes in consumer behavior have impacted the company’s ability to meet orders while transitioning operations to a new dedicated fulfillment center.
To address these challenges and improve revenue, Booktopia has implemented strategies to enhance conversion rates and improve the overall book-buying experience for customers. These strategies include simplifying website purchases, developing a guest checkout feature, and optimizing website speed on mobile and desktop platforms.
Despite its current struggles, Booktopia remains determined to overcome these obstacles and regain financial stability. The company’s directors have agreed to have their fees paid in the form of shares for the next six months, with Chairman Peter George assuming the role of executive chairman during this period. Booktopia acknowledges the volatile economic climate and changing consumer spending behaviors as ongoing factors impacting its performance. However, the company remains committed to adapting and thriving in the ever-evolving book industry.
