Dymocks reaffirms move offshore pending decision on parallel imports

Australian book retailer Dymocks will forge ahead with plans to move its online business offshore should the Productivity Commission recommend the parallel importation restrictions on books remain.

The company’s chief executive, Don Grover, told Computerworld Australia he would wait for the outcome of the Productivity Commission’s inquiry (PDF) before making the decision to move the online business overseas but would not hesitate to do so if there is no reform.

“We’ve made a Submission of the National Retail Association Limited (PDF) (PDF) submission to the inquiry and will wait until we see the outcome of that enquiry,” Grover said. “We’re certainly hoping the parallel importation restrictions will be removed and removed quickly so we can bring cheaper prices to books in this country and allow us to compete with online retail which is frankly the predominant reason why we were looking to moving our website offshore.”

“There is no economic argument not to [remove the restrictions], the economics of this make far too much sense,” he said. “This is what we predicted would happen and it’s happened much faster and much deeper so I’m hoping and we’re very confident that the government will review positively, by which I mean remove parallel importation restrictions.”

Previously, the Federal Government has maintained its decision to keep the local market closed to parallel imports, which resulted in Aussie book sellers being charged a higher wholesale rates as local publishers are not subject to competition. Even after removing the Goods and Services Tax (GST), which is not charged on books in the UK and the US, books in Australia are still more expensive.

Despite the hype around e-readers, Grover said only 1.5 per cent of Dymocks overall sales were e-books and that the format continues to occupy only a very small market segment.

“E-book sales have increased but it is still a very modest sized business, there isn’t an e-reader yet that our customers have invested in substantially with a number of books in that format,” he said. “Certainly lots of people are investing in e-books and we continue to supply them but people realise that the physical book is still where the love affair remains.”

“It’s the physical nature of holding a book, sitting on a lounge or on the beach and it doesn’t run out of battery,” he said. “They’re the sort of things customers love, it’s a physical interaction that the majority of consumers still love and cherish, so while we acknowledge that e-books have a growing place, they’re not the main business and I don’t believe they are going to make up a significant part of bookstores in the next 10 years.”

Grover also noted the collapse of rival company REDgroup retail, parent company to local Borders and Angus and Robertson, which was put into involuntary administration earlier this year by the company’s owner, Pacific Equity Partners.

Grover said that while the collapse was unfortunate, it provided a much-needed rationalisation of the number of bookstores in a previously “overcrowded” industry, allowing other booksellers to remain viable for a longer term.

Following the closure, Dymocks purchased two sites from REDgroup, one located in Carindale, Queensland, and the other in Castle Hill, New South Wales, where Dymocks had previously owned and operated a store. Grover said both of the sites were offered at a lower price of entry than normal.

“They’re two substantial geographical locations where we weren’t represented and we wanted to make sure we could bring Dymocks booksellers to those communities,” Grover said.

Follow Chloe Herrick on Twitter: @chloe_CW

Follow Computerworld Australia on Twitter: @ComputerworldAU

Copyright © 2011 IDG Communications, Inc.

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