When does a hobby become a business that will disrupt an entire industry? This is something Tony Nash, CEO of Booktopia knows all about. Tony is no stranger to e-commerce. Starting his first online business more than 18 years ago, most regard him as a pioneer in Australian e-commerce. What started out as an evening hobby for Tony and his family 11 years ago, Booktopia is now selling one book every 10 seconds and turning over $50 million referred to as Australia’s Amazon.
I was recently lucky enough to get some time with Tony to ask him about his success. Building a business on a $10 a day budget, family business and what he predicts the future holds for Booktopia and Australian eCommerce.
1. You’ve been in BRW Fast 100 for six years running now, the only company ever to achieve that feat. What the defining moment that made you realise this was no longer a hobby?
Well, it was never a hobby. It was a side project alongside our web marketing consultancy that just kept getting bigger. I was never much of a reader but the idea of an online business that had over 4 million unique products with a long tail, had a supply chain that was quite archaic lacking quality digital feeds, needed a complex and sophisticated website with no local online player that was dominating was very appealing. The business started with no business plan. We actually set a goal by month 4 to be making 2 sales per day and by the time we got to month 4 we were up to 10 sales per day.
2. $10 a day budget to $50 million turnover 11 years later is an inspiring story. What did you do differently to sustain the growth of Booktopia? And how did you choose where to invest the precious budget?
My strategy to grow was actually quite simple. Each month I would look at what we did last year for the same month and aim to be 40% more this year for the same month. I did that for 10 years straight. It actually proved to be quite a useful strategy because the pressure to hit that goal was a stretch but achievable, and the team got into the rhythm of growing all the time. Every one expected the business to grow. The budget of $10 was used on Google AdWords and at that time another company managed our site and fulfilled our orders and we got a commission on everything we sold so I focused on authors and title keywords rather than broad terms like books, bookshop and bookstore. We didn’t build our own site and do our own fulfillment until we were 3 years old. We sold more books, made more money and reinvested it. We were lucky in the beginning because our web marketing consulting business was generating a fair amount of cash and paid for our overheads. That went on for about 5 years and then we could stop the external work and the business could pay for the management team.
3. What’s the most important lesson you’ve learnt about growing and scaling a business?
There are many lessons and I am struggling to find one stand out but doing my best to pick one I would go for… focus on one thing and do it well. I saw many other competitors in the book business start adding other lines of product once they got their books to a certain level. What happens if you add another line you have to put the same amount of energy to get it going as you do for your book business and the book business suffers. When we added DVDs we were already turning over $15 million and it was a much easier decision and the sales came naturally from the traffic we already had. Focus on one line of product and do that well.
4. Was there a reason you chose not to include an investor in Booktopia?
We were generating enough cash from the sales we were making and that funded our growth. We now have 90 employees, a multi-million dollar Distribution Centre, a multi-million dollar website, 530K stocked titles ready-to-ship… and so much more all from the cash generated from the business. So an investor was never required and we didn’t want to dilute our shareholding.
5. There are plenty of incredible family businesses in Australia and plenty more that didn’t make it through the tough times. You’ve built this business with your family including several others. What is your secret to a thriving family business?
We all have different skills. I am a salesman and marketer, recruiter, negotiator. My brother, Simon, had financial experience as well as selling and purchasing skills. My brother-in-law, Steve Traurig, was an ex-IBM software engineer as well as a salesman. My sister, Elana Traurig, has great operational and organisational skills. We work collaboratively but at the end of the day if a decision has to be made as the CEO I make it.
6. Australian retailers compete on a global scale where it’s now more often you’ll see the same item sold overseas with free shipping to Australia. What advice do you give to Australian retailers to take on this global market head to head, stay competitive and maintain customer loyalty even if the price is higher than the offshore alternative?
Holding stock in Australia ready-to-ship is mission critical to compete. If someone overseas is offering free shipping then they are not doing so by the fastest delivery option. Keeping in mind there is no such thing as free shipping. It is just included in the price of the goods. So being in the ball park when it comes to price and offering a compelling shipping offer is all that is required to take on the global players.