In this episode of Add To Cart, we are joined by Stu French, Co-Founder of Ethicool, a children’s book publisher and online retailer. Stu has an eCommerce background, having worked in digital roles for Telstra and AGL, but he’s also a children’s author. Combining his two career areas, Stu, with his wife Teigan, launched Ethicool in February 2020, selling kids books with great stories and ethical messages. In this chat, Stu discusses the link between his corporate life and his career as a kids author and publisher, tells us about the fulfilment model he set up to help distribute into the US and shares why he doesn’t see Amazon as a competitor, but a partner to his book business.
“I openly sit here now and say we were fundamentally not ready to launch in the U.S. But I’m glad we did, because we just kinda had to make it work“Stu French
Questions answered in this episode include…
- Why did you decide to sell children’s books?
- What are your top tips for U.S. expansion?
- How difficult is it to write a good book for kids?
So many reasons to sell kids books
The reason we landed on kids books was there’s not actually a huge presence for kids books online. You’ve got Amazon and you’ve got Booktopia and there’s the big model and they’ve dominated the space, but they don’t focus so aggressively on children’s books. They typically do novels and non-fiction so there’s a bit of a room and opportunity in the market there. But also, all the other things you need to think about starting an e-commerce business around warehousing and pick and pack and postage. I mean, books are very easy to store and have a very long lifespan. It’s also an evergreen market since kids are being born all the time, so you don’t need to worry about things like seasonality and that sort of stuff.
So these are all the things that kind of fed into picking this as a vertical and then compounding that, when I really kind of dug into the commercial profile of something like this, looking at other publishers, they’re not vertically integrated. They might deal with authors and they might produce the work, but then to get that work to market is a value chain where there are three to four different parties involved. So we looked at a few mock P&L’s for this, and we ascertained that if we go direct to market both B2B and B2C and that is a vertically integrated business model where we handle everything on the value chain. It is high, gross margin, like kind of 90, 95%, if not more, in some cases, because the production cost is relatively large.
Believe it or not, fart books make millionaires
There are a lot of fart books and perhaps sadly, they do sell really well. There are fart book authors who are multimillionaires quite literally. So the recipe is not that hard.
Alot of the books that have sold in the tens of millions of copies are really not very special. So they might have a catchy jingle that they use or they might explore a theme that is very engaging or endearing for children. Or they might focus on something that’s topical or timely, but really that the recipe is not particularly hard to access. It’s just a matter of pulling together all of these elements and obviously. The illustrative component and the creative side from a visual standpoint is more challenging and more time consuming, but most people aren’t doing author-illustrator anyway.
And that’s probably a segue into the part of children’s book production that is hard. Once you’ve written something, actually getting it to market and turning it into a book, let alone finding a publisher that will do those things for you, that’s where there are barriers to entry. And it’s also one of the gaps we were looking to close, with launching Ehticool to make that process more accessible to people, particularly emerging artists who didn’t really have a platform to get what they do to market.
The benefits of partnering with your competition
Certainly in Australia and New Zealand, Amazon isn’t into what it is in the U.S. so that was definitely a thing. In saying that, we have recently launched into the U.S. and we’re getting pretty good traction in that market and actually we’ll probably also parallel sell our books on Amazon in the U.S. in the near future as well. And I guess we also looked at this to that end. I mean, if you can’t beat them, join them. We were completely not averse to having our product on that channel and certainly we have that in Australia already. It’s only kind of a minority channel, the market for us, but it’s one that if it’s scaled it’s still commercially viable and that’s what it came down to.
If we ended up having Amazon as a main channel to market, even supplemented by our distribution and our own Shopify platform, then that would be fine. It was sort of interesting because on paper, obviously we could be perceived as a competitor. Now we’ve sort of partnered with Amazon. We are selling through Amazon channels and we’ll continue to do so.
Amazon’s Launchpad program is really good. They’ve structured it really well. It gives you some exposure to some really smart and experienced people. And that was of more interest to us. There’s a grant component there and that grant is decent, but it vaporizes relative to the cost of setting up a business like this. We wanted just more exposure to other people that were doing similar stuff. We’ve had that through the other grant winners and also some of the subject matter experts that Amazon bring in. They run a whole kind of training course for winners of the program and that was insightful for us. You can’t lose having a relationship with the biggest book retailer in the world – that’s been invaluable for us.