Australia: Booktopia eager to set foot on Amazons online book sales turf with a fresh acquisition

The Bookworld acquisition will expand Booktopias share of the domestic online book market from 62% to more than 80% and lift sales from USD 54 million in 2014 to an estimated USD 90 million by the end of 2015, afr.com reports.

Penguin Random House paid less than USD 5 million for the assets of Borders and A&R after the collapse of their parent, REDgroup Retail, in 2011 and rebranded the Borders website to Bookworld in 2012. Booktopia has about 1.7 million registered users and Bookworld about 1.5 million, although Mr Nash suspects their customers might overlap.

Mr Nash intends to keep the Booktopia and Bookworld brands separate, to give customers a different buying experience, but said the merger would give Bookworld customers access to a wider range of books and better customer service. Booktopia has four million titles on its website, a similar number to Bookworld, but has 100,000 titles in stock at its dedicated online fulfillment centre in Homebush and a wider range of backlist and academic titles.

Booktopias sales have been increasing by 30% to 40% a year from 2013, reaching USD 54 million in 2014. Mr Nash expects that rate of growth to continue as more consumers buy books online and believes sales will eventually match those of Amazon, which is estimated to sell between USD 200 million and USD 350 million of books in Australia a year.

IBISWorld said retail book sales had fallen more than 5% a year from 2010, while online book sales had surged 26% a year. Online book sales represent about 7% of the market, well below penetration rates in the UK and the US.

The Bookworld acquisition, which will be funded from cash flow and new bank facilities, increases the likelihood of Booktopias shareholders pursuing an initial public offer, emulating other recently listed pure-play online retailers such as SurfStitch. The company is 90% owned by the extended Nash family – Tony, his brother Simon Nash, brother-in-law Steve Traurig and sister Elana Traurig – and 10% owned by staff.