COLLAPSED BOOKTOPIA UNLIKELY TO RETURN

Booktopia, Australia’s biggest online bookseller, is in administration and unlikely to come back anywhere near the same size, with large scale redundancies already being made.

Prospective buyers have until Tuesday to get their expressions of interest lodged, with several groups reportedly interested in making a bid, although none are likely to revive it.

Whether Booktopia's collapse will have a major impact on the local book printing industry remains to be seen. Local printers compete against China on timeline, and having books printed onshore wins in the online world, because they can be ordered on Booktopia, in very short runs, then printed and delivered in the short timelines the online giants want, without them having to carry much in the way of stock.

Booktopia's collapse has been dramatic. Only two years ago the company - which was established 20 years ago - was selling a book every 3.9 seconds, and had five million customers. Today its share price today is 98.5 per cent lower than its peak. It lost $16.7m in the six months to December, and is thought to have been trading in the red for more than a year. At the height of Covid, its sales were $224m in 2021, and $241m the following year.

The Australian book industry is a $1.9bn business, a figure that has remained virtually unchanged for a decade, although profit margins have declined by about five per cent. Some 40 per cent of books, the largest category, are educational, an area in which Booktopia was particularly strong.

Booktopia was alone amongst the online bookselling giants such as Amazon, in that it committed to promoting books by Australian authors, so its demise may impact Australian book printing more than that of the giant Book Depository, which Amazon closed a year ago, or Borders which collapsed a decade ago. Booktopia's demise leaves Amazon as the only major online book distributor, although Queensland based QBD is a decent sized operation.

There are an array of smaller online booksellers, including major bricks and mortar chain Dymocks online business, and there are around 500 independent bookshops in the country, in a market which is steady.

Reasons cited for the collapse of Booktopia include an expensive $12m investment in a new high cost and high tech robot distribution centre, a failure to keep costs under control in a low margin business, a failure to predict a slowdown in book sales growth following the end of Covid, and a reduction in discretionary spending from the public arising from the cost of living crisis.

It was also facing increasingly strong competition in its 'pile 'em high sell 'em cheap' business model, unable to make a dent in the market shares of major rivals Amazon, Big W and K-Mart, all of whom sell more than Booktopia.

Its disastrous decision to give customers only two days to return damaged books for a refund is also cited as reason for the company's demise, as customer confidence was smashed. The move was later overruled by the Federal Court, which ordered the company to repay $6m to disgruntled customers.