Behind Booktopia’s demise and what it says about the future of indie bookstores

The collapse of Booktopia has not come as a shock but rather a reminder that retailers, especially in publishing need to maintain a competitive edge.

The post Behind Booktopia’s demise and what it says about the future of indie bookstores appeared first on Inside Retail Australia.

The collapse of Australian online book retailer Booktopia has not come as a shock but rather a reminder that retailers, especially in publishing need to maintain a competitive edge.

The compounding reasons that led to the voluntary administration have been cited as a slowdown in book sales, reduced discretionary spending and overspending on a distribution centre.

In a mass redundancy, Booktopia has terminated 165 staff members, with only 18 left to manage the retailer’s collapse.

The closure of Booktopia has presented the Australian retail and publishing industry with a gap and a lesson in consumer behaviour.

On tunnel Vision

For a lot of industry experts, the downfall of Booktopia was only a matter of time as its business focussed on a low-margin industry with an Amazonian competitor.

“Its customer value proposition had given up. In other words, when you call a business Booktopia, you’re defining it as books only,” Brian Walker, founder and CEO of Retail Doctor Group, told Inside Retail.

Booktopia’s peak coincided with the pandemic lockdowns, when it brought in$224 million in sales in 2021 and $241 million in 2022 – yet the company never turned a profit.

While the $12 million investment in a new high-cost and high-tech robotic distribution centre may not have been what ultimately broke the bank, it demonstrated to retail experts that Booktopia was unclear on its point of differentiation.

“They were going to get out-competed and when they went to buy this warehouse, invest in this warehouse, the view at the time was scale, speed, convenience, we can do more, sell more, be more,” stated Walker.

“I’m not sure that that, in hindsight, proved to be a strategic investment that they needed to make.”

Mal Chia, digital retail expert and Ecom Nation co-founder, concurred that Booktopia could have benefited from exploring an omnichannel business model.

“It definitely would have stood a better chance than just effectively staying still and just doubling down in fulfilment and logistics. It’s a zero-sum game to do that,” Chia told Inside Retail.

Booktopia’s over-capitalisation in logistics and fulfilment consumed the majority of its cash flow – areas that added little value to its customers’ shopping experience.

“It’s hard for a retail business which is unremarkable to really stand out – because at the end, Booktopia wasn’t doing any one thing that remarkably well,” stated Chia.

“Even the investment into the fulfilment centres wasn’t really elevating them to the same standard as an Amazon – there were still constant issues with delayed shipping, with the punitive return policies which were affecting consumer confidence in purchasing products,” he explained.

The demise of Booktopia has left Amazon as Australia’s only major online book distributor – with QBD books as an honourable mention.

On niching down

Despite the collapse of Australia’s largest book-selling website, there is still demand for book retailers in Australia with the industry valued at $1.9 billion.

According to Chia, while there may be some knock-on effects for Australian publishers, the collapse and closing of Booktopia does not say much about the demand for paperback and hardcover books in Australia.

“Independent bookstores are still thriving and doing very well. Bookstores which are doing something remarkable and are servicing a niche, continue to perform really well,” Chia shared.

The rise of book-tok, amongst the popularity of celebrity book clubs as well as film and television adaptations has rekindled the publishing industry.

Consumers who are looking for an offline hobby in books are also looking for an offline shopping experience in bookshops.

Beyond local bookshops, niche bookstores that cater to a literary category and community are taking off. 

Minotaur, Trilogy of Romance, White Dwarf Books, State Bookstore, Metropolis and Books for Cooks are just some of the independent bookstores in Australia that have chosen to specialise. 

“There’s several bookstores, whether they be comic book stores or dark romance, or a lot of niche genres who are actually growing and performing quite well, because they service that niche exceptionally well, rather than trying to service a broad swath of the market in an average way,” Chia concluded.

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