Online retailer Booktopia often competed with Amazon in the Australian market. Image source: jcomp, via Freepik
Online retailer Booktopia has been bought by electronics retailer digiDirect, after the company went into administration due to severe financial difficulties.
First founded in 2004, Booktopia was an Australian-based online book retailer, and competed with Amazon for online book sales.
Booktopia entered voluntary administration in July with debts totaling around $60 million. This is after the company announced 50 redundancies in June as a cost-saving exercise.
Most of these debts were owed to publishers who supplied Bookopia’s stock, while consumers totaled up to $15 million through sales and gift cards.
There were an estimated 150,000 unfulfilled pre-orders at time of administration, worth up to $12 million. There was also an estimated $3 million in gift cards owed to consumers.
Booktopia’s administrator, McGrathNicol, has stated that the sale price of Booktopia will “not be sufficient to provide for a return to shareholders” and the deal did not include paying off Booktopia’s debts.
Customers have reported frustration and disappointment about being unable to obtain the books they ordered, with refunds also being difficult to obtain without going through their credit providers, such as PayPal.
McGrathNicol stated that digiDirect intended to offer “special arrangements” to customers who had unredeemed gift cards with Booktopia.
Shant Kradjian owns digiDirect, which he also founded in 2005. The company focuses on cameras and electronics, though Kradjian stated he had been seeking expansion into “new retail verticals”.
Kradjian stated he was “excited about this acquisition and glad it could be kept in Australian hands”.
“There are clear opportunities for shared expertise and efficiencies that will eventually create a better experience for Booktopia and digiDirect customers”.
He did add the caveat that this was “a conversation for down the road”. The acquisition also included Booktopia’s owned brands, Angus & Robertson and Co-Op Bookshop, along with $14 million in inventory.
Keith Crawford, a partner and administrator at McGrathNicol, provided a statement in which they were “incredibly pleased to have completed the sale”.
“The transaction 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.”
“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”.
There were several high-profile bidders looking to buy Booktopia, supposedly with Woolworths, Dymocks, QBD Books, and Kogan.com among the potential buyers.
McGrathNicol stated that the deal will allow Booktopia to resume trading.
