233: How a Bootstrapped Ecommerce Company Took on Amazon, With Steve Traurig of Booktopia

Steve was a guest of StartCon, Australia’s largest startup and growth conference. It was held over two days at Randwick Racecourse in Sydney on Nov. 30 and Dec. 1. One For The Books The story of Booktopia, ‘Australia’s favorite bookstore,’ and how they’re conquering the competition—even Amazon. Once upon a time, a programmer who got his start with IBM was given an enchanted opportunity to create a magical bookstore that would one day battle powerful giants. The magical power? With just a click of a button, Australians could have brand new books delivered within days to their doorsteps. And just like in most fairy tales, our hero and his friends stumbled upon the opportunity entirely by accident. “We literally fell into it,” says Steve Traurig. Traurig and his two brothers-in-law, Tony and Simon Nash, were running an online marketing consulting business when Angus & Robertson, the 130-year-old Australian bookseller, approached them and asked if they would be interested in getting into the book business. The pitch was a white label book retail website, meaning that everything from the website creation to the distribution would be handled by Angus & Robertson. All Traurig and company had to do was add their personal flair. But Booktopia, the company that arose from that project, would end up becoming something much bigger. Nearly 15 years after Traurig’s brother-in-law said he “wouldn’t mind giving that book thing a bit of a go,” Booktopia has served over 4.2 million Australians and is on track to bring in $115 million this year, making it the market leader in online book sales. Oh, and they now own Angus & Robertson. The journey from their very first book sale to squaring off against Amazon for online book supremacy in Australia was a chess game of strategic move after strategic move. Thanks to some shrewd decisions, including focusing on customer interaction and building their own ecommerce and fulfillment systems, Booktopia’s well on its way to happily ever after. A White Label Bookshop, Transformed In 2004, with only $10 a day to put toward advertising their new business, Traurig and the Nash brothers dove headfirst into the book world. “When we first started, we owned nothing,” Traurig says. When Booktopia first launched, Angus & Robertson created their website, managed their distribution and owned the brand. Traurig and his brothers-in-law were responsible only for marketing, so they created a few Google AdWords campaigns (one of which is still running today) and waited for their first books to sell. By the end of the first year, they were doing $100,000 in business a month. This worked beautifully for the trio and for Booktopia for three years, but in 2007, they had to confront the reality that what they were building, with revenue ever increasing, could all go away in an instant. They also realized that the fulfillment company was neither able to keep up with the growth they were experiencing, nor were they able to meet the expectations Traurig held. “We decided we had to go out on our own, because we were actually building a company of value,” he says, “and we realized that if you want to have something of value, you have to do it yourself.” Things were going well, and they realized that in the current setup, they didn’t really own anything of substance, should they ever want to sell. So they broke away from the fulfillment company and set out to turn Booktopia into something of their own. They set up their first warehouse, hired a warehouse manager, bought some shelves off eBay, and got to work building their own core systems. “Dealing with those sorts of numbers in databases, in the website, in the front end, in the backend, etc., the scale is beyond almost any other retail environment, and we had to make it all work,” he says. “We built the systems ourselves and that takes particular commitment and skill.” With all of the changes taking place, it would have been reasonable to see a marked customer drop off. Before the transfer, they did about 130 orders a day, but that number only dropped to about 110 a day, even after everything from their systems to their website changed. Through it all, the Booktopia customers remained loyal. In fact, the focus Booktopia places on the customer experience would come to define their brand. “It’s about the customer obsession,” Traurig says. “About putting yourself in the place of the customer.” When Traurig and his brothers took on the fulfillment side of the business, they began with only a single book on their physical shelves, but knew that building up their stock was the only way to give their customers the best experience. Instead of the long wait from the moment an order was placed until a supplier could deliver the order and then ship it off, all they had to do once they built up stock was grab an item from the shelf the moment the order came in and send it along. “That was essentially a business-changing experience, because the feedback we got from the customer was instantaneous,” he says. Customers responded with glee that their books arrived so quickly, inspiring them to remain loyal and recommend the bookseller to friends. Because of this organic growth, Booktopia has never needed to take on investors. Even without investors, they have consistently outmatched the competition and met their sales goals. In fact, they made the BRW Fast 100, Financial Review’s list of the fastest growing Australian brands, seven times between 2009 and 2016, the only company to do so. Traurig says that they have also built strong relationships with their banks, something he describes as a critical part of doing business. This gives them additional wiggle room if necessary, staving off a need for traditional investors. “A lot of startups, a lot of founders, think they immediately need to go out and grab someone else’s money and give away bits of the company,” he says. “There’s definitely merit in doing that for certain types of models. We chose to actually build a solid business organically and build it off the back of our customers and customer service.” And this approach has carried them through what could have been a business-ending battle. Squaring Off Against a Giant When Amazon announced that it would be launching in full in Australia at the end of 2017, Traurig wasn’t nervous. The institutions they worked with, however, had concerns. The gargantuan online retailer had generated $136 billion in revenue the year before, with all signs pointing to continued growth. So how was “Australia’s local bookstore” going to keep up? Well, according to Traurig, they had been keeping an eye on the behemoth from the very beginning and hadn’t let its success deter them. “From our point of view, when we started Booktopia, Amazon was shipping $100 million worth of books into Australia already, and we didn’t worry about that,” he says. “We were fearless.” They focused instead on their own business, and the most important asset: the customers. Due to its global nature and size, Amazon has an impersonal quality to it that Traurig says Booktopia always vowed to counter. For example, Booktopia’s website has the office’s physical address, email, and phone number on every single page, not only allowing but encouraging customers to reach out and share praise, complaints, and questions instantaneously. They wanted to be accessible and feel like a part of the community. To keep up with the emails and phone calls, they quickly hired their first customer service staff, a cheerful individual who still answers the questions of Booktopia customers today. Traurig says they take customer feedback extremely seriously and use it to inform their continued development. With a 20-person development team on the case, he says that Booktopia is always in pursuit of the best possible user experience, a quest that can only be completed through regular, honest feedback. Traurig says that this approach to customer service has