The Book Depository is a fast growing business which sells books internationally from its UK base. Last year, its sales grew by 160% to £40m, enough to take the number five slot in The Sunday Times’ Fast Track 100 list.

I’ve been talking to MD Kieron Smith about the site, the reasons for its success, and the challenges of running an international e-commerce operation.

I hadn’t heard of The Book Depository until recently – how long has it been going?

It was launched four and a half years ago, making £4m in the first year, and £40m last year. This year we are on target for sales of £65m. 

It has been a relatively low profile business, and
has managed to grow through word of mouth, both in the UK and
internationally, partly thanks to the international free delivery
offer. We do get a lot of recommendations online. For example, Book Depository gets four times as many mentions online as Waterstones.

It hasn’t done much in terms of getting its brand values out there so it isn’t as well known as it could be, but we will be looking to do more on this front later this year.

The last time we talked, you had recently launched BookRabbit, so why did you move to Book Depository?

I left the company about seven months ago after the holding company behind the business imploded six weeks after launch. I moved to my new role at Book Depository along with seven of my staff from BookRabbit. The site is now a shadow of its former self, and is little more than a collection of affiliate links.

You could say it was an early victim of the credit crunch, it didn’t fail because the business model was poor, or the site wasn’t good enough, which is a shame.

What else is planned for the future?

We are working on a project called BibDib, which will be an online bibliographic database containing information, reviews, recommendation and everything we can find about all the world’s books, a kind of IMDB for books. 

We are going to get a beta of this out later this year, and content such as reviews, from BibDib can then be fed back into the Book Depository to give customers more information.

Why did you decide to relaunch the site?

With some websites the front end is nice and shiny but the back end is a mess, but on Book Depository the hard work on the basics had already been done, but the rest of the website needed updating. We built an entirely new platform, with a new catalogue and stock availability feeds.

We also added some fun features like the Google Maps widget which shows what people are buying and where they are from, we added more bibliographic data, and deep search features; Book Depository is the only site where you can search for books using library codes. We now have 2.2m titles available within 48 hours, which is 700,000 more than Amazon can manage.

With such a large catalogue of titles, what are the biggest challenges in making it usable for customers?

We have tried to include a lot of options to drill down in searches, and avoid customers having lists of books to look through which are too large. We sell a lot of long tail titles, which is part of the reason for our success, and people often arrive at the site knowing what they want.

The challenge is to combine social / directive search with the ability to search for specific titles using things like library codes.

When I reviewed the site recently I was impressed with the simplicity of the checkout process – what was the thinking behind the design?

I wanted to keep it as easy as possible to use, so as everyone was adding things into the process during the design, we were asking whether it was really necessary, so we have a clean checkout process with only the essential information included. The need for registration, something I’ve always hated on e-commerce sites, was also removed. We have a conversion rate on the site of around 10%, and the simple checkout process in one reason for this.

As well as selling books direct you also show provide links to Amazon on your product pages, what is the thinking behind this?

It is counter-intuitive, but it works well. It shows customers that our prices are competitive compared to the biggest book retailer out there. In the online book business, you can’t avoid Amazon, and customers will often visit the site to see if they can get a better price anyway, so having this on our website means that customers can see prices without having to leave the site.

We aren’t often beaten on price for long tail titles but Amazon will often give big discounts on bestsellers, so if customers do go to Amazon to purchase, then we at least get 8% commission on these sales.

What proportion of your sales are from outside the UK?

The figure fluctuates, but roughly 50% of our business comes from outside of the UK. We’ve seen a lot of changes around exchange rates as the pound has become so volatile, we have experienced a big jump in business from the US and Canada. Our biggest territories, in this order, are Australia, North America, especially Canada, and Scandinavia. 

What are the biggest challenges in running this kind of business, selling overseas?

We always emphasise the importance of operational tightness, and we need to get the best out of our supply routes, which we are able to do since we sell books in large volumes. Our COO used to work on Honda’s supply chain management, so he knows the business well.

Effective communication is also very important when selling around the world. We operate our customer service lines from 6am to 2am to deal with customers in different time zones, and also own the customer experience, as everything goes through our Gloucester warehouse.

How can you afford to offer free shipping to anywhere in the world?

It has been part of our success, and it simplifies things straight away in customers’ minds and has allowed us to build up the business in places like Australia. It’s a volume led business, and we can get very good deals with couriers as we are shipping upwards of 130,000 products per week. We operate on low margins, and the business depends on keeping things tight.

How many staff does The Book Depository employ?

A lot of the staff are temporary workers packing books, but we have a permanent team of 24 people, which is pretty small for a business making £65m a year.

How do you deal with payments from different countries?

We use a HSBC system which has worked well for us, and allows us to sell in Dollars and Euros as well. We recently added the option of paying by American Express, and we will shortly integrate with PayPal. We could have gone down the route of offering lots of different payment methods, but keeping it simple has worked for us.

Fortunately, we haven’t really suffered much from fraud, partly because books aren’t a big target for fraudsters, and we can easily pick up on any unusual buying patterns.

What is the secret behind The Book Depository’s success so far?

A lot has to do with the availability on the site, and the fact that we can offer titles within 48 hours. Amazon has availability for 1.2m titles, then it pushes customers onto the marketplace after that. Waterstones only carries 100,000 titles, while Borders has only one wholesaler and 250,000 titles. It can back order, but this is an effort for them and a wait for customers.

Our proposition is that we only advertise the books that we can get hold of, that and the free worldwide delivery is our USP.