At 8.41am on Monday, online bookseller Booktopia’s board of directors released an update to the stock exchange that gave away just how acutely the business was struggling. Its new boss, barely one year into the job, had suddenly and inexplicably resigned; 50 jobs were on the line (adding to the 40 already cut last January); and it had scrambled together emergency funding of $1 million.

The raft of changes announced by Australia’s biggest online bookstore are the latest of many as it battles three straight years of unprofitability, a rock-bottom share price that has plummeted 98 per cent to 4.5¢, and a haemorrhaging of key senior executives including their most recent chief executive, chief financial officer, and last year chief marketing officer.

Tony Nash, the co-founder who was ousted from the business he helmed for 18 years, has been brought back temporarily as an executive director and sales director.

Booktopia’s woes have left many in the industry asking questions about whether it has a future. But Booktopia’s struggle for survival is not reflective of other parts of the book-selling industry, with many sellers continuing to trade steadily and optimistically.

“We’re always portrayed as almost redundant and ‘going out of business’ and ‘bookshops are closing’. It’s always a very negative approach. But the numbers don’t say that,” said Australian booksellers association BookPeople CEO Robbie Egan.

“It’s not that bookshops aren’t viable businesses, it’s that Booktopia appears not to be.”

The COVID-19 pandemic lockdowns, catastrophic for many parts of the retail industry, were a major boost for Booktopia. Reading surged and so did the company’s sales, turning over $223.9 million in the 2021 financial year and $240.8 million in the 2022 financial year.

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Despite the revenue surge, Booktopia recorded losses, not profits, of $18.1 million and $15.1 million for those respective years. Emboldened by the demand for books, Booktopia poured $12 million into a new highly automated warehouse, a move that has turned out to be miscalculated as people bought fewer books amid cost of living pressures.

“If you can’t take [nearly $250 million in annual sales] and set yourself up, something’s not quite right,” said Egan. “Booktopia is a business that hasn’t been run properly.”

Booktopia declined requests to be interviewed.

The local bookstore is not dead

Booktopia – and its much larger US competitor Amazon, arguably the world’s most successful online bookstore – have been a threat to bricks-and-mortar bookshops.

But they also forced the traditional bookshops to adapt and sharpen their point of difference as a physical space. Those that have deeply embedded themselves in their communities, in literary circles and writer groups, host regular events and workshops and have relationships with nearby schools are those that have found success.

Readings, Victoria’s biggest independent bookstore chain, holds more than 400 events a year across its eight stores, partners with the Melbourne Writers Festival, and donates 10 per cent of its profits to non-profits that support literacy and the arts. In 2016, Readings was named international bookshop of the year by the London Book Fair.

“We try to make sure that all of our stores are sort of a hub for the local community,” said Readings managing director Joe Rubbo, who took the reins of the bookstore chain from his father in August last year.

“We have a lot of launches in store, book readings. Our priority is on really good customer service.”

To encourage foot traffic and create a welcoming space, interior design and the in-store experience have been carefully considered. Readings’ flagship Carlton store was redesigned by Nest Architects, while its Hawthorn and Emporium stores were crafted by Kerstin Thompson Architects.

“The way that you can come in look and browse and find something that you didn’t expect to find – an algorithm can’t compete with that experience.”

The reality of running a small business is that it’s tough, said Egan, so if the bookstore around the corner has been a fixture for some time, it’s probably doing better than just staying afloat.

“An independent brick-and-mortar bookshop on a high street in Australia could be turning over anything from $500,000 to $20 million,” he said.

“We’ve always been here, we’re not going to go broke.”

The business of books

While there are success stories to be found, the size of the book store industry has shrunk from $5 billion in 2011 to $1.6 billion in 2024, according to IBISWorld figures.

Some 1670 book stores currently are in operation, a number that 13 years ago was nearly double at around 3000. The collapse of Borders and Angus & Robertson in early 2011 also wiped out about 181 physical bookstores that year.

E-readers such as Kindle and the growing popularity of audiobooks have also broadened the ways people consume books and are capturing more sale dollars, making up 11 per cent, or $173.8 million, of industry revenue.

Like every other business, bookshop operators are watching their rent, electricity and insurance bills go up, while the price of books has stayed fairly stable over the years. At the same time, pricing competition is coming from not only online players, but a surprising retail segment: discount department stores.

“Our members are saying, ‘We’re sick of seeing Big W selling books for half price’,” said Egan. “It undermines and undervalues what is a really important cultural product.”

“The last thing we want is a landscape where you can only buy a book at a discount department store or an online giant. That would be unhealthy, I think, and terrible for new Australian writing and small publishers.”

Next year, David Gaunt will celebrate 50 years owning and operating one of Sydney’s most beloved bookshops, Gleebooks. Over the years, margins have slightly improved, but that’s being outpaced by the growth in overhead costs.

“What’s changed clearly is not the fact that books are bought and sold and read,” he said.

“If you ask me the most obvious change in the last 50 years, it’s the radical degree of change, the fact that you can’t easily predict what’s gonna happen next.”

Gaunt estimates about 90 per cent of bookshops also run an e-commerce business. But like clothing, customers will still want a tactile experience of the product, and put simply, people reward businesses that show they care.

“People tell us, ‘here I am with my six-year-old, and when I was a six-year-old, my mum and dad bought all my books from you … you turned my child into a reader’,” he said.

“It’s a thing that people value. They last, and they last forever.”

“It’s not rocket science to know that that’s something you should get right, and that’s something no online retailer can offer.”

A pile of unsold books and expensive problems

The frontier of customer service is not one that Booktopia has been winning lately amid a rising tide of customers complaining about significant delays.

It is one among an increasingly expensive number of problems the online retailer must solve to survive. Its trade payables stand at $32.8 million, its lease liabilities are $41.1 million, and net assets are -$20.9 million, according to half-year figures from February. It still owes the consumer watchdog $2.9 million after being fined $6 million for telling consumers they only had a two-day window to initiate a refund or replacement.

A contractor that worked closely with Booktopia for many years before being let go during a recent round of cost-cutting said the business had been in a downward cycle for some time and seemed to have a stressful culture.

“They’ve lost a lot of good people. They lost people who’d been there 10 or more years,” they said, speaking under condition of anonymity. “They took redundancies … their salaries were too high for the size of the business.”

Most institutional investors have long left the business behind: Booktopia’s largest shareholders are its own directors. More than 29 per cent of shares are held by Nash and fellow Booktopia co-founder Steven Traurig, who is also Nash’s brother-in-law. Traurig is a former board director and until recently was the chief commercial officer.

Though Booktopia has stolen market share away from other booksellers, its collapse would not be cheered.

“Even though they have been a thorn in the side of my members for some time, they serve a really important role in supporting Australian authors,” said Egan.

“If they’re going to collapse, I’d love an orderly one over time for people to adjust.”

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