From the source: Tony Nash, Booktopia
Tony Nash is the founder of online bookstore Booktopia, which he began as an evening side project with a $10/day budget in 2004. It now employs 143 people and has had an annual growth rate of 44.1 per cent since 2012. Prior to launching Booktopia, Tony worked in recruitment.
COMPANY PROFILE: Booktopia first made the BRW Fast 100 list in 2009 when its revenue hit $7 million. By FY2016, revenue was up $80.7 million from $51.4 million last year. In 2015, Booktopia acquired Angus and Robertson and DC Cameras & Optics.
It has made the list again for a seventh time this year and was ranked 86th.
Inside Retail: Congratulations on Booktopia making it to BRW’s Fast100 a seventh time. What’s that feel like for you?
Tony Nash: I’m never one to celebrate too much because it’s just recognition that you’re absolutely on track. The benefit of not celebrating too much is that I also have what I call the entrepreneurial mindset not to fall into the lows when things don’t work out the way you want. I live and work at a very even keel when it comes to the business, so it serves me well in that way.
It’s good for our customers to know that they are purchasing from a company that’s recognised by an Australian organisation that’s very well-known. The BRW Fast100 has been running for 25 or so years. It gives people the trust and confidence to purchase from us.
IR: You’ve certainly come a long way from when you started Booktopia as a side project in 2004.
TN: I started it as just a little evening project on a budget of $10 a day. It took three days to sell the first book and by the end of the month, I’d made a couple of thousand dollars’ worth off sales and by the fourth month, I was up to $30,000 a month, then by the end of the year, $100,000 a month.
IR: What made you think at the time that you could compete with major online booksellers at the time?
TN: We didn’t know it at the beginning, but we found as we continued to grow year-on-year with high double-digit growth that we filled a niche in Australia that others weren’t able to fill. We focused on Australian content, Australian authors and Australian titles that meant that when Australians came to our site, they felt like they were accessing a more focussed subset of what Amazon was offering.
Then when we started to hold more and more stock and we could deliver to our customers quickly, we realised that’s what people were looking for – they wanted to get access to product at a pretty good price, but with fast delivery. [We realised] that commitment to holding more stock, rather than just simply ordering it and having it go out to the customer was going to differentiate us from the competitors, and that’s what we worked on. It’s about price and availability.
IR: How do you feel about the continued rumours about Amazon coming to Australia?
TN: Yep, we’re ready for them. They’re not coming though. We have access to the consultants that worked with Amazon and they’ve agreed that it’s just not viable at the moment for them to come to Australia.
It’s too much of a commitment. The logistics are too unsophisticated for what Amazon is used to in the US and Europe. Mainly because of how our country is set up, with two main hubs in Sydney and Melbourne and everything is distributed covers large areas. But in Europe and US, there’s a constant connection network of town after town after town, where you have a network that delivers you efficiencies and scale and cost savings. In Australia, you just don’t have that. So they’ve pushed it back to 2018 or 2019.
More importantly, Amazon is everything to everyone. They’re not one thing to a focused group of people. You’ve only got so much real estate on your web page and even less on your mobile phone, which is the way more and more consumers want to interact with a company, so how much can they put on their homepage on a phone?
It’s really limited, so Amazon can’t be the bookseller to Australians. They can be the e-commerce retailer to Australians, but then you’re going to be limited as to what you can communicate. Books are now going to be less than 4.3 per cent of all their revenue. So it’s a sideline to them.
IR: What do you think you offer that’s different to Amazon?
TN: Our delivery option to Australia is much cheaper. Ours is $6.95 delivery for as many books as you want, whereas with Amazon, it’s $US20 for your first book and then $10 thereafter. We’re cheaper than them because of shipping. Even on their slow model of delivering books within two weeks, we’re still cheaper than them. They just can’t compete against us and our pricing is competitive enough.
IR: Booktopia experienced very fast growth in a short period of time. Sometimes there’s a danger in growing too quickly and burning out. How have you been able to maintain that without burning out?
TN: Over the last six years, we’ve had 44 per cent compound annual growth in our revenue, which is a lot. It’s all been organic, so there’s been no external investment – we haven’t thrown a lot of money at it and tried to make it stick. Everything we do is very, very conservative and measured in terms of what we have to do to deliver a result.
We’re not chasing down sales that are wasting our time. We may have done it in the past, but we stop it quickly if it doesn’t work for us.
The other thing is our team has been with us for a long time and has gotten into the rhythm of growth. You’re not bouncing them around, having one year of massive growth, then plateauing then growing again. Constant growth is really easy to manage because you feel that there are going to be more sales the team gets used to that.
IR: How has the last year been since you acquired Angus and Robertson and DC Camera and Optics?
TN: Angus and Robertson was easy – it’s a book business, so we plugged it straight in and started fulfilling out of our distribution centres. We brought a lot of our expertise and knowledge to that business that enabled us to extract more sales for every 1,000 customers that are coming to our site than the previous owners. We were able to deliver a higher conversion rate and we’re happy with its progress.
With DC Cameras, we were opportunistic in terms of buying a business outside of books, but we do want to expand our capabilities. We’ve built in our logistics and software, so we want to work out ways to capitalise on that.
IR: Are you continuing to look beyond offering books in the business?
TN: The way we look at it is, what’s one deviation away from books? You’ve got magazines, calendars, stationery, games, puzzles – they’re not books, but they’re not offensive to a browser who comes to your site and buys some greeting cards. They’d go
“Yeah, yeah, I’d expect that in a bookshop as well.”
But if you’re selling binoculars in your bookshop, people go “Huh? What’s going on here?” That’s two deviations away from books. We’re looking at ways that we can add to our line of offering, but it’s very limited at the moment.
We still thinks there’s tremendous opportunity for us in the book business. We’re on track to do $100 million in revenue this year, and we believe we could get up to $250-300 million.
IR: Tell us about the kind of customer service that you offer.
TN: Cameras are similar to books in that the more customer service you give it, the more you can connect with the consumer and therefore, that can set you apart from competitors.
Imagine going into a bookstore where someone’s standing behind a counter and just says, “Whenever you’re ready, I’ll take your money. There’s lots of books here” instead of “Can I help you? What do you like? Have you read this? Have you read that one? You would like this one. You’ve never heard of them before – they’re a first-time author and they’re going to be huge?”
Then the customer walks away with a book under their arm and they’re dazzled within the next 20 hours. That’s good customer service.
That’s what we try and emulate online from a book point of view. We’ll never be able to emulate exactly what a bookshop can do, but we’re selling over 20,000 books a day – bricks-and-mortar stores won’t get the scale that we have.
If you’re buying a $10,000 camera or $5,000 lens or binoculars, you need to have people who are experts who can help you through the purchasing process.
IR: Would you ever consider launching a bricks-and-mortar store?
TN: You can’t say never, but right now, it’s not really in our interest. You’ve already got Amazon doing it. We have 130,000 titles and over 700,000 units.
Amazon is much bigger and has many more than that. But in their [pop-up] stores, they have about 5,000 – 6,000 titles. Is it a showcase? Is it like an Apple store where you can walk in and showcase your product and who you are? It really is very, very small in comparison to what they offer online.
I think if you just focus on your knitting, which is logistics for us, that’s important.
IR: What are your plans for 2017?
TN: To just continue to grow. We had the IPO that didn’t work out the way we wanted, so we’re looking at some private equity at the moment. We’ve just expanded our facilities, so we’ve taken one of the neighbouring units in our business park adjacent to us. That’s 30 per cent more than what we had – 13,000sqm in total. It’s about the size of three rugby fields.
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