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Speaker 1: Welcome to Fear and Greed Sunday feature. I'm Michael Thompson.

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Speaker 1: Online book retailer book Topia is in a bit of

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Speaker 1: trouble over the last couple of weeks. Its new CEO

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Speaker 1: has resigned at this talk of more job cuts and

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Speaker 1: has had to pull together emergency funding. There are big

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Speaker 1: concerns over whether this business can survive. It finish the

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Speaker 1: week with its shares in a trading halt. Now this

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Speaker 1: all comes after three years of losses, despite huge sales

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Speaker 1: during the pandemic. Because Lockdown's really brought people back to

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Speaker 1: reading books. It makes this interview today a really interesting listen.

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Speaker 1: Back in February of twenty twenty one, so right in

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Speaker 1: the middle of that sales boom, Sean Aylmer talks to

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Speaker 1: Tony Nash, the co founder and then CEO of book Topia,

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Speaker 1: and as you'll hear in the interview, there was a

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Speaker 1: great deal of optimism about where the company was heading.

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Speaker 1: It had floated on the Aussie market the previous year.

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Speaker 1: It was Australia's biggest online bookstore, a household name. It's

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Speaker 1: shares traded that year at a high of almost three dollars.

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Speaker 1: Since then, things have turned very very sour. Before they

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Speaker 1: went into the trading hold, shares in book Toopia were

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Speaker 1: just four cents. This is a fascinating chat from twenty

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Speaker 1: twenty one. I hope you find it interesting.

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Speaker 2: In the rush of IPO's late last year, there were

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Speaker 2: a couple of standout stories and this one is one

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Speaker 2: of my favorites. If you've ever bought a book online,

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Speaker 2: then you're probably familiar with book Toopia. The Australian e

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Speaker 2: commerce site posted almost two hundred million dollars in sales

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Speaker 2: last year and increased its share.

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Speaker 3: Of the book market.

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Speaker 2: It's a terrific success story. But last year's listing on

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Speaker 2: the AIX was actually the second attempt after pulling an

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Speaker 2: IPO back in twenty sixteen. Tony Nash is a co

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Speaker 2: founder and CEO of book Tobia and I welcome Tony

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Speaker 2: to the Fear and Greed Virtual Studio.

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Speaker 4: Good a good to be here, Tony.

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Speaker 2: We'll get to the listute, but first, can we go

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Speaker 2: right back to the beginning. Tell me your story, Tony

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Speaker 2: in how book Topia came about?

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Speaker 3: So I started it on the fourth of February two

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Speaker 3: thousand and four. For those that are listening this week,

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Speaker 3: that that was just a week ago, our seventeenth birthday.

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Speaker 3: It was a side project that was started.

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Speaker 4: On a ten dollars a day budget.

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Speaker 3: In the evenings prior to that, we were doing Internet

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Speaker 3: market and getting people to the top of Google driving traffic.

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Speaker 4: And we had done a job.

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Speaker 3: And I say we I'm in business with my brother,

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Speaker 3: my sister and my brother in law, and we hadn't

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Speaker 3: done a job to get Anguson Robertson to the top

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Speaker 3: of Google, which introduced us to the book industry. We

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Speaker 3: used the same company they were using to manage our

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Speaker 3: site and for our orders.

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Speaker 4: There was no plan.

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Speaker 3: There was no light bulb moment to say we're onto

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Speaker 3: something here. In fact, most people said back in two

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Speaker 3: thousand and four, what do you want to start.

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Speaker 4: A bookstore for?

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Speaker 3: You know, there's orders, there's Amazon, there's Angerson Robertson, there's DIMIs.

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Speaker 4: You're too late. Now, people say to me, well, it's

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Speaker 4: lucky you got in early.

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Speaker 2: Ironic, isn't it.

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Speaker 3: Now?

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Speaker 2: You mean that you worked with your brothers and brothers,

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Speaker 2: sister and brother in law. What's it like working with family?

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Speaker 4: It's been pretty good. I'm the eldest. They do what

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Speaker 4: I tell them to do.

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Speaker 2: I know. I've met some of your family, Danny, and

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Speaker 2: I'm not sure that that's right. I reckon they will

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Speaker 2: speak their mind quite nicely.

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Speaker 4: Yeah, I don't know.

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Speaker 3: We work well together, obviously, not all families can do that.

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Speaker 3: My brother just recently retired after.

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Speaker 4: The or just before the IPO.

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Speaker 3: He's happily achieved his mission. Were all different skills. Mine's

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Speaker 3: more sales and marketing. My brother in law was from

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Speaker 3: an IT background.

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Speaker 4: My brother kind of looked after.

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Speaker 3: In the beginning of the finances and some of the

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Speaker 3: operational things. My sister operations. So we all kind of

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Speaker 3: had different skill sets which worked well for us as

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Speaker 3: a team.

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Speaker 2: Okay, now the story of booked Topia, I mean seventeen

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Speaker 2: years it's not an overnight success. From memory, there was

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Speaker 2: a legislative change around import rules that made a difference.

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Speaker 2: Is that Am I remembering that right?

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Speaker 4: Actually? No, that's well before.

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Speaker 3: So nineteen ninety one actually was when he when the

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Speaker 3: laws came in and basically they changed it so you

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Speaker 3: could get one copy of a book if you had

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Speaker 3: a firm sale from a customer, to get that from

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Speaker 3: overseas rather than the local supplier. Because prior to that

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Speaker 3: distributors and publishers won the rights to books and through

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Speaker 3: the nineteen sixty A copyright law, they couldn't go anywhere else,

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Speaker 3: and if you had a firm sale from a customer,

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Speaker 3: you could actually order it from whoever.

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Speaker 4: And of course that.

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Speaker 3: Was written before the Internet started, so when you got

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Speaker 3: a website and you had an order from a customer,

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Speaker 3: you could order it from whoever you wanted, So that

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Speaker 3: from that aspect it did help unberknownst to them everyone

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Speaker 3: at the time when they wrote it, of course.

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Speaker 2: Yeah, okay, So moving on to the IPA. Now you

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Speaker 2: initially wanted to list in twenty sixteen, it was a

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Speaker 2: very different environment back there. E Commas wasn't what it

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Speaker 2: is today, and Amazon was about to arrive in the country.

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Speaker 2: Why did you pull the IPO initially in How difficult

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Speaker 2: was it back then? And then we'll get onto what

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Speaker 2: happened late last year.

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Speaker 3: First of all, no one knew that Amazon was coming

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Speaker 3: when we started. That only came out the week that

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Speaker 3: we were looking to try and firm up the price

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Speaker 3: and start getting ready for the final road shows, So

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Speaker 3: that came right out of left field. But if we

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Speaker 3: take people back to that time, Temple and Webster. We're

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Speaker 3: trading at fifteen cents. Red Bubble was not doing that great.

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Speaker 3: Cogan had flat line since they had ipo'd within the year,

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Speaker 3: Surf Stitch was going kind of backwards and heading out

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Speaker 3: the door. It was kind of like going down to

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Speaker 3: Bondai Beach on a midwintersday with us subtly coming in

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Speaker 3: from the Antarctic Francale.

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Speaker 4: Ice cream right.

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Speaker 3: We pulled it because the demand wasn't there that there

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Speaker 3: was just you know, Amazon's going to annihilate you.

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Speaker 4: And of course we've gone from.

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Speaker 3: Eighty million, which was our revenue back then, to two

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Speaker 3: hundred million since Amazon arrived. So we were actually not

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Speaker 3: going to IPO at the end of last year. We

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Speaker 3: were going to do it in a year's time because

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Speaker 3: we had done our first capital rays in January of

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Speaker 3: twenty twenty, so a year ago almost of the day,

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Speaker 3: and we were putting that money into more automation to

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Speaker 3: get us from being able to ship the two thousand

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Speaker 3: individual books per day to sixty thousand, and that project

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Speaker 3: was going to kind of complete around October November time,

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Speaker 3: and so we wanted to have that completed before we

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Speaker 3: went to the market to prove the operational leverage that

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Speaker 3: we've accomplished. And then, of course a month after we

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Speaker 3: had raised the capitol and started that project, the pandemic

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Speaker 3: hit and we were able to meet the demands of

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Speaker 3: our customers. In fact, during that period, from many of

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Speaker 3: those months, we actually had to turn off most of

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Speaker 3: our marketing because we were getting too many orders. We

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Speaker 3: were hitting capacity thirty thousand units in and out per day.

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Speaker 3: We're actually getting up to thirty four to thirty five

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Speaker 3: thousand per day. We kind of hit just past the

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Speaker 3: middle of the year and we said, look, the pandemic

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Speaker 3: has really moved e commerce from the wings to center stage,

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Speaker 3: and they've darkened the theater and there's the spotlight on you,

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Speaker 3: and so we just thought we should give it a crack,

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Speaker 3: and we just worked as fast and as hard as

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Speaker 3: we could. In fact, twenty and sixteen proved to be

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Speaker 3: a bit of a dryer run for us. We had

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Speaker 3: already had the backbone of a prospectus. We had already

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Speaker 3: done a lot of management road shows and met with

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Speaker 3: unmanagers before, so we weren't newbies to the process. So

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Speaker 3: there was a lot of things. There was a lot

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Speaker 3: of the data room and all of the verification process

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Speaker 3: was still a lot of it was still quite relevant,

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Speaker 3: so we could really fast track it and that's why

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Speaker 3: we were able to get it away so quickly.

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Speaker 2: Tony, stay with me, we'll be back in a minute.

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Speaker 2: I was speaking to co founder and CEO of book Topia,

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Speaker 2: Tony Nash. In your mind, what are the pros of listing?

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Speaker 3: For some companies, it gives you access to capital. For us,

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Speaker 3: it's more so that we're a retailer. People are talking

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Speaker 3: about you all the time and you're not paying for

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Speaker 3: that marketing. So although everyone says, well, being listed as

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Speaker 3: really costly, and it is that there's cost associated to

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Speaker 3: being listed, but when you're when you're in retailer, and

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Speaker 3: I'm sure JB. Hi Fi and Harvey Norman and all

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Speaker 3: those ones that are listed can attest to this more

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Speaker 3: than me, we felt that even though there are costs,

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Speaker 3: you become talked about more and therefore or it's not

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Speaker 3: going to come at a cost of the business in

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Speaker 3: terms of the listing costs associated. So that was one

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Speaker 3: part and the other is that you get access to capital.

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Speaker 3: And we felt that e commerce is still on the rise.

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Speaker 3: I mean e commerce in Australia is really only ten

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Speaker 3: percent of all retail sales, whereas in North America and

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Speaker 3: Europe it's more like twenty percent or so. So we

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Speaker 3: haven't even really hit our strides here. And one of

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Speaker 3: the things you'll if you really pay attention to the media,

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Speaker 3: you'll see that the big retailers, like I think just

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Speaker 3: in the last couple of months were super retail groups

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Speaker 3: that they're throwing one hundred million dollars at all of

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Speaker 3: their e commerce systems in infrastructure, and that means that

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Speaker 3: not only the pure plays like US are actually really

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Speaker 3: making headway. Now we're getting the traditional retailers who probably

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Speaker 3: prior to the pandemic really the light had never come

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Speaker 3: on in the boardroom to the level of, you know

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Speaker 3: what the opportunity was. I think in Europe and North

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Speaker 3: America was already much more mature because everyone's kind of

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Speaker 3: condensed into a small space. E commerce was already happening.

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Speaker 3: Amazon was already in full strides, so people had to

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Speaker 3: take action.

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Speaker 4: Uspralia, with Amazon's arrival.

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Speaker 3: They didn't really make a big splash and a big wave,

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Speaker 3: so perhaps the boardrooms of these retailers were not as

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Speaker 3: proactive as they could have been. The pandemic certainly awakened

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Speaker 3: them from their slumber. And that's why to me, being

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Speaker 3: listed and being part of the game is good for Booktopia.

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Speaker 2: You mentioned before you had a very good year in

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Speaker 2: twenty twenty and book sales across the country you seem

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Speaker 2: to have increased. Telling me a little bit about your

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Speaker 2: customer base, how big it is, and who's buying books

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Speaker 2: and what they're buying, just a flavor of what's popular.

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Speaker 3: So five million izes have brought from us, about two

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Speaker 3: million or so are active, and seventy percent of women,

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Speaker 3: probably from the ages of around twenty five through to sixty.

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Speaker 3: It seems to be the norm. Interestingly, we've been tracking

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Speaker 3: a number which we call the aspect, and that is

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Speaker 3: basically the annual sales per customer total, and that is

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Speaker 3: how much is each customer spending each year, and that's

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Speaker 3: from eighty five dollars to one hundred and eleven dollars

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Speaker 3: over the last few years. And so our goal is,

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Speaker 3: you know, what have we got to do to get

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Speaker 3: that to two hundred, Because if you can get the

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Speaker 3: customers that have already bought from you buying more each year,

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Speaker 3: then you're building that critical mass and you're heading in

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Speaker 3: the right direction.

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Speaker 4: That's one thing.

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Speaker 3: We have a very big customer base in government departments,

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Speaker 3: library schools. Tertiary is big. We bought Anguson Robertson in

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Speaker 3: twenty fifteen, so now we can say we're one hundred

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Speaker 3: and thirty three years old. We bought the co Op

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Speaker 3: the University Bookshop when they went into administration a year ago,

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Speaker 3: and so we were already making a lot of headway

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Speaker 3: into the tertiary academic markets, and so that's really big

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Speaker 3: and really important to us. We like all the tertiary

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Speaker 3: books because they're expensive and bookshops don't stop them and

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Speaker 3: therefore wear it, and so that's that's a lot of it.

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Speaker 3: We also, about four years ago something that we did

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Speaker 3: after the twenty sixteen IPO what it didn't happen, has

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Speaker 3: got into distribution.

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Speaker 4: So we became a book distributor.

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Speaker 3: Publishers appointing us from Australia around the world as their

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Speaker 3: local distributor. So we are now selling to ourselves. We

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Speaker 3: sell to Amazon, demics, to QBD, to book depository and

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Speaker 3: we obviously get bigger Discouncus were the distributor. You get

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Speaker 3: the stock on consignment rather than paying for it, you

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Speaker 3: have terms that take longer. Plus we also got into

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Speaker 3: publishing in the last couple of years as well, so

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Speaker 3: we're now publishing as well. So our customer base is broad,

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Speaker 3: very strong regionally in rural areas of course, but big

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Speaker 3: in the cities as well.

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Speaker 2: Most of the numbers that we're talking about here we're

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Speaker 2: talking about hard copy styles, aren't we.

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Speaker 3: Yeah, so ebooks is small.

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Speaker 4: Ebooks is actually declining. Would you believe after all that

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Speaker 4: hype and in.

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Speaker 3: A postulation around they were going to take over no

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Speaker 3: physical books, it's made a bit.

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Speaker 4: Of a comeback.

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Speaker 3: I think a lot of people spend a lot of

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Speaker 3: time on their screens now, their phone and their computers,

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Speaker 3: working from home and so forth, and so I think more.

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Speaker 4: And more I'm hearing that people go, no, I just

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Speaker 4: want to get a book.

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Speaker 3: Audiobooks is on the increase, So we have our own

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Speaker 3: ebook and audiobook downloadable platform through book Topia. We partner

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Speaker 3: with the Japanese Canadian company called racton Cobo, and so

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Speaker 3: that's another part.

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Speaker 4: But it's small. Physical books is huge.

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Speaker 3: Physical books is over ninety percent of us of our

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Speaker 3: product sales.

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Speaker 2: We'll be back with more in a moment. My guest

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Speaker 2: today is Tony Nash, co founder and CEO of book Topia.

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Speaker 2: How do you service thirty thousand requests every day?

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Speaker 4: You must?

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Speaker 2: I mean, I know you have invested in automation. Can

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Speaker 2: you take us through that a bit.

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Speaker 3: Yeah, So we've invested up to now twenty two million

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Speaker 3: dollars worth of automation. We've actually got another twelve million dollar.

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Speaker 4: Project with robots as well.

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Speaker 3: So we have a lot of conveyors, automatic packing machines, scanning.

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Speaker 3: Everything has been built in house. All the software from

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Speaker 3: the website through the content management systems, the warehouse management systems,

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Speaker 3: all the proprietary algorithms for ordering, reordering or handle in house.

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Speaker 3: The one thing is that you cannot scale unless you

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Speaker 3: invest in automation. Otherwise you're throwing more people at it

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Speaker 3: that you'll be working twenty four to seven. Our first

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Speaker 3: shift arrives at five am and they finish up around

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Speaker 3: eleven pm. And you'd be working weekends as well, so

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Speaker 3: we work Monday to Friday.

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Speaker 4: You've got to automate. It's the only way.

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Speaker 2: Great story, this great story. So what's the future hole

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Speaker 2: for book Toopia? I mean, you've expanded over the seventeen

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Speaker 2: years incredibly and bought organizations. What next now that you've

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Speaker 2: listed just to continue to grow.

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Speaker 3: One of the interesting things for me is that we

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Speaker 3: just announced our unordered the half yearies last week and

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Speaker 3: what we did for the half year of FY twenty one,

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Speaker 3: so from July first through the thirty first of December

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Speaker 3: of twenty twenty was the same as what we did

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Speaker 3: for the whole of twenty eighteen, so, which is not

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Speaker 3: that long ago. Really that then that kind of doubling

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Speaker 3: over a few years without funding is pretty comfortable.

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Speaker 4: So for me to my goal is to.

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Speaker 3: Grow and get to five hundred mili in Australia to

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Speaker 3: two point five billion dollar industry. I feel that's well

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Speaker 3: within our scope, and then I want to look internationally.

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Speaker 3: There may be some acquisitions. The problem we have is

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Speaker 3: there is really no one else to buy, so it

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Speaker 3: has to be very technical. Could be in the distribution publishing.

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Speaker 3: Not sure how we can continue to do that, but

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Speaker 3: to grow into Asia and Europe and North America.

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Speaker 4: Amazon.

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Speaker 3: Amazon is not into books anymore. They prefer someone else

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Speaker 3: to sell the book to. Someone else may get their

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Speaker 3: clip of the ticket on the marketplace. So we know

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Speaker 3: that it's less than three percent of their sales books,

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Speaker 3: and they've just everyone knows that baysous a step down.

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Speaker 3: They've appointed CEO of AWS, who has been there right

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Speaker 3: from its infancy, is a tech guy and an Amazon's

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Speaker 3: a tech company with Prime, with their marketplace, with Kindle,

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Speaker 3: with Audible, they're AWS.

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Speaker 4: It's all tech.

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Speaker 3: So we don't see them as a as a long

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Speaker 3: term competitor for physical books.

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Speaker 4: They will still be there.

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Speaker 3: They're massive, I mean the world's biggest book retailer, and

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Speaker 3: they will be for many years, but it's not a

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Speaker 3: priority for them anymore.

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Speaker 2: Fantastic, Tony, thank you for talking to Fear and Greed.

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Speaker 4: Good on you, thanks for your interest.

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Speaker 2: That's co founder and chief executive officer of book Tavia

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Speaker 2: Tony Nash.