It’s been well over a year since Amazon launched into the Australian market. While it may take years for the e-commerce giant to gain a strong foothold, it will take more than just price to compete. Especially in the online book market where Booktopia has steadily carved out their place as Australia’s leading online book retailer since 2004.
What Amazon is trying to do in Australia is something that Booktopia has perfected over years of understanding their market and optimising their business model. So, with Booktopia undertaking a capital raise and inviting Aussies to for the first time for only $250, we look at how the local success story stacks up against the global behemoth.
You Can't Be Everything To Everyone
Whilst Amazon started with books, as of January 2018 the company stocks 562 million products. This rapid expansion into other industries and categories has seen books and e-books diminish to only 4.48% of Amazon’s total revenue. Compare that to Booktopia who has perfected their model over 14 years, selling only books, eBooks, audio books, DVDs, magazines, maps, calendars, journals and stationery.
Macquarie Group analyst Andreas Inderst notes that "Amazon is certainly a serious competitor, but it is a generalist with a focus on basics and lots of discounted products." The benefit of concentrating efforts on one or a few product segment/s is that specialist retailers are able to curate and recommend relevant products giving a better customer experience. Booktopia achieves this through its in house team of merchandising and product experts who improve user experience, making browsing and purchasing easier.
Third Party Sellers
Amazon also uses third party sellers which make up 42.75% of the business. The issue with third party sellers is that the order can be fulfilled directly by that seller who will also handle the customer service. This means that a customer of Amazon might be dealing with different processes and customer service teams with every order. Booktopia sells all its own books and has an in house call centre based in Australia handling any issues a customer might have. The customer-first mentally meant Booktopia won the 2018 People’s Choice Australian Business of the Year at the Telstra Business awards.
Where Amazon Has Met its Match
There is no denying that Amazon has set the bar high however it’s set it at a level Booktopia is already comfortably hitting. Below are a few examples where Amazon has met its match.
- Convenience of e-commerce: Amazon is the largest online retailer in the world but that doesn’t mean other companies aren’t also geared towards e-commerce. Booktopia was born online, established by experienced internet entrepreneurs who, prior to 2004, developed and sold live-in chat software and provided digital marketing consulting services.
- Wide Selection & quick delivery: Booktopia has strategic partnerships with the major publishers and suppliers, who work with them to ensure customers have access to a full range of titles (a total of 148,000 in fact) at competitive prices. In most cases their order will be shipped the same day or next day.
- Digital Innovation:The website, warehouse systems, content systems, algorithms and automation software have all been purpose built in house by the software development team. There has been heavy investment in customer-first innovation including proprietary technology.
Booktopia has experienced high-end double-digit revenue growth of 31.9% each year for the past 10 years, despite Amazon shipping into the Australian market. Over the years, 5.2 million people have bought from Booktopia with 1.8 million repeat customers. Of those 5.2 million, 5 million are Australian meaning 20% of the Australian population is a customer, cementing a strong base. So why do they keep coming back?
"We're Australian, we hold a lot of stock, we get it to customers quick, we've got a call centre here, and we sponsor a lot of Australian literacy projects (writers festivals, readers conferences). Everyone has their own reason but most of the time it's because they buy it from us and they get it quick. Most of the time they have a great ordering experience and they tell people. We've got a lot of passionate supporters and fans." - Tony Nash, CEO of Booktopia.
Booktopia is undertaking a capital raise through Equitise to scale quicker and sooner. You can become a co-owner of Australia’s leading online book retailer from $250, standing to profit if the company continues to do well. Click to learn more.