Today I filed my statement of claim with the receivers McGrathNicol for monies owed to my publishing company, Ventura Press, by the now defunct Booktopia.

I am not holding my breath to get paid. I come in behind the banks and secured creditors who cash flowed the growth of a company which at its height had a turnover of  $240M and a market cap of $400M.

The Booktopia origin story is now well known. Started by brothers Tony and Simon Nash, who together with brother-in-law Steven Traurig, started an online bookselling business in 2004. They famously built the business up on a $10 a day marketing budget.

I have supplied them with books from the start and I even published their father Peter’s holocaust survival memoir Escape from Berlin.   

Books have always been intriguing to outsiders who come into our industry and think they can shake it up. It makes a pleasant change from the ‘money never sleeps/ greed is good’ investment banking world. I note Booktopia’s second largest shareholder bought his now worthless 6% share because ‘he was a bibliophile’. 

I wish he had spoken to me first. 

So what went wrong?

The 2020 covid online fervour allowed for a share market listing which had previously failed. It gave false confidence that a book pure play could take market share from Amazon, with its free delivery via Amazon Prime. It falsely promised sustainable quarterly growth in a challenged market, and it forecast enough cash to service the massive logistics and fulfilment centre needed to service online demand.

It was a bonfire of the vanities.

The arrogance of a digital world view combined with a founder/family controlled board was evident from the start. Booksellers and publishers have long been allies, working collaboratively to support and expand our industry. Together we nurture emerging talent, support debut authors, host big name events, writers festivals, school visits and library gatherings. No algorithm can match what the book industry has created.

Online retailers can only ever respond to demand, they can’t create it. As such, there was no feeling of collaboration with Booktopia, more a them and us. I know from the key account managers that the ‘sell-in’ meetings were increasingly fraught and demanding. Good people on their side left as the atmosphere soured.

And yet the big money flowed into Booktopia.

That the Nash family had no knowledge of  the book industry seemed to worry no one who backed them. And that the Booktopia board did not have one director with book industry experience. The board and their backers felt no need to be part of the ecosystem they served.   

This is the second time I have witnessed this. When PEP bought the retail chains Angus and Robertson and Borders back in 2008, it was clear that they did not know the book business and that in fact Big W was the largest seller of books in Australia. They now owned the runner up and the whole entity collapsed into administration in 2011, taking 2500 jobs and 20% market share with them.

The margins of the book business are tight and largely inelastic.

Booktopia regularly promised their shareholders increased margin but to do so was not realistic. Publishers can give away slightly more discount in return for volume (which happens with Big W) but online bookselling does not offer volume. In fact quite the reverse, it relies on a supply chain algorithm which is the ultimate ‘just in time’. So the increased margin being promised was never going to be delivered. 

Amazon is not coming to the rescue.

In 1994, Amazon started out selling books as they had a fixed price and were easily shipped to the customer. But they soon made the shift to being The Everything Store as they could not make any profit only selling books. They now dominate the ANZ online bookselling market with incredible free and super fast delivery. They have no need to buy a failed Booktopia. 

So back to my statement of claim.

I do hope a good bookseller buys what is left of Booktopia from the McGrathNicol ashes. There is a space for an online offering, but this time hopefully as an integral part of the book business and not separate from it.

We seasoned book people have survived, where many market backed darlings have not.