For a company often labelled Australia's version of Amazon.com Inc (NASDAQ: AMZN), Booktopia Group Limited (ASX: BKG) founder and chief Tony Nash doesn't see the resemblance.
"Books are not a priority for Amazon anymore," he told The Motley Fool.
"It's less than 3% of their revenue now. Sure, it was 100% when they started out, and is a part of their DNA, but it's not a priority for them."
But Amazon did start as an online book store, so the comparisons are inevitable.
Booktopia's initial public offering closes on Tuesday with the shares released on the ASX on Thursday 3 December.
The IPO price is $2.30 per share, giving the retailer a market capitalisation of $315.8 million.
Not the first time at the circus
Booktopia attempted to float 4 years ago, but soon after Amazon announced plans to open Australian operations.
Potential investors became nervous and the IPO was cancelled.
"People needed to see that they weren't going to annihilate us," said Nash.
"We've gone from $80 million to over $200 million [of revenue] during that time."
This showed that Amazon was never a threat, according to Nash. It's too busy with other projects like cloud computing, grocery deliveries, video streaming and audio books.
"They would prefer someone else to sell the book to someone else and they take their 20% clip of the ticket," he said.
"Physical books are not what they want to focus on."
The money raised from this IPO – $43.1 million – is similar to the amount Booktopia sought the first time round in 2016.
Our moat is incumbency: Booktopia CEO
When Nash created Booktopia in 2004, he remembers people calling him crazy for establishing a bookstore against the giant incumbents.
By 2015, the internet upstart was acquiring fallen star Angus & Robertson. The company also bought University Co-op Bookshop last financial year.
Notwithstanding this industry disruption in the past 16 years, Nash said Booktopia's moat is its sheer market dominance.
"The number 2 online book retailer in Australia is turning over $25 million – a company named Zookal. They do textbooks for university students then it drops away after that," he told The Motley Fool.
"We don't have daylight between us and our competitors. We've got days and weeks… There's really no one else."
When you can't just hire more people
According to Nash, Booktopia is at a point now where automation and robotics are required to take its operations to the next stage of growth.
"As you grow, you hit certain choke points within your business and you need to invest," he said.
"You can't simply throw more people at it… You just don't have the hours in the day nor the space to put people in."
As such, it has gone on a spending spree of $36 million for logistical technology to pick and pack books in its western Sydney warehouse.
The program will upgrade its capacity from 800,000 units of stock to 1.8 million.
Booktopia earlier this year raised $8 million through a private equity round to fund the technology drive. Nash said $25 million of the funds raised in the IPO would also go towards this program.
The company has found a sweet spot in a highly commoditised industry, Nash believes.
"We don't necessarily have to be the cheapest. We've worked out at that if you're in the ballpark people will come to us."
Cycling to Paris
The funding will also allow Booktopia to keep higher stock levels.
"I don't want to run out of the popular ones. That's my main issue right now," Nash said.
"The top 10, 20, 30 thousand titles – we shouldn't run out of stock… These are the things we're going to address because we're well-funded."
Booktopia wants to take full advantage of people rediscovering reading during the year of COVID-19.
"People are starting to re-evaluate their lives… The value of a book and the value of your time and a value of an enriched life – the pandemic has really helped recalibrate ourselves."
Despite a long 16-year journey, the ASX listing is not the beginning of the end for Nash.
"If I was doing the Tour de France, the IPO to me is like on the 10th stage, going through the 40km mark, you have 40km to go, you've a big climb up some mountain… Then after the 10th stage there's another 11 stages to go."
