Embattled bookseller Booktopia will resume operations and hire more than 100 people after online electronics retailer digiDirect agreed to buy the 20-year-old firm in a deal that also gives digiDirect a ready-made modern, automated warehousing operation in Sydney’s west.
The acquisition agreement, which was announced to the ASX by administrators McGrathNicol Partners just a month after they assumed control of Booktopia, will enable the “immediate resumption of trading” for a company that administrators called “a vital part of Australia’s publishing industry”.
DigiDirect’s successful bid – which comes after reports that Booktopia was being courted by up to 60 companies including Kogan.com and QBD Books – comes with a commitment to hire more than 100 new employees, with former Booktopia staff “encouraged to join” the revitalised organisation.
“Booktopia has been a key part of Australia’s publishing industry for 20 years, and transitioning the business to such a well-known Australian retailer is a great outcome for all stakeholders,” McGrathNicol partner Keith Crawford said as the deal was announced.
The deal “will result in the retention of all remaining employees, the recruitment of some 100 additional employees, and continuity of supply for Booktopia’s trade creditors.”
Founded in 2004, Booktopia quickly grew to handle over 8.2 million orders per year, eventually tapping a $43.1 million ASX listing to acquire book retailers including Bookworld, Angus & Robertson, and The Co-op Bookshop.
However, it ran into headwinds as global rivals like Amazon and BookDepository exploded in popularity in Australia – and, more recently, took financial hits including a $6 million ACCC fine and challenges building a $12 million automated warehouse in Strathfield South in NSW that it hoped would boost annual revenues to $360 million.
After posting a $16.7 million loss for the second half of 2023 – up from a $3.9 million loss a year earlier – Booktopia axed a reported 165 employees and entered voluntary administration in July with just 18 workers remaining.
Come for the warehouse, stay for the books
DigiDirect’s website was paused the day after the acquisition announcement, displaying a notice that the company is “currently updating our store with new stuff”.
And while the sale price remains confidential, Crawford said it was not high enough to deliver a return to shareholders – but it will right a company reported to have $60 million in debts, 150,000 outstanding orders worth $12 million, and $3 million in liabilities to gift card holders who will be extended “special arrangements”
“Booktopia is a cornerstone of the Australian book industry,” digiDirect founder Shant Kradjian wrote on LinkedIn, promising to make “significant investments into refreshing our inventory” and welcoming the 100 new jobs created at the company’s “state-of-the-art Sydney-based Customer Fulfilment Centre…. We are focused on revitalising the business with new systems and processes”.
Booktopia’s new distribution centre, which processed 1.8 million orders in the 12 months before the company’s administration, will also optimise digiDirect’s business selling cameras, electronics, gaming systems, computers, and other consumer goods – while saving it the expense and complexity of building its own automated facility.
“Our trajectory is future-focused,” Kradjian said, “with our intent being to earn the trust of authors, publishers, suppliers and most importantly, customers [and] ensure it remains a beacon in the Australian literary landscape.”
The acquisition of Booktopia – a rare positive outcome amidst ongoing troubles that have pushed the number of Australian insolvencies to decade highs – is the latest stage in a global game of musical chairs that has played out over 20 years as globalisation drives the consolidation, sale, and closure of booksellers in response to shifting demand and consumption patterns.
Booktopia’s purchase of Angus & Robertson, for example, came after investors bought the brand, along with New Zealand sister company Whitcoulls, in 2004 after they bought it from UK retailer WHSmith – which acquired A&R in 2001.
UK-based challenger brand Book Depository was bought by Amazon in 2011 and shuttered last year, while in 2019 US bookseller Barnes & Noble was purchased by private investors along with UK giant Waterstones – which in 2022 bought Blackwell’s, the UK’s largest independent bookstore, after a search for buyers that owner and president Toby Blackwell said had been “an extraordinary challenge”.
