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Here’s why the Booktopia (ASX:BKG) share price is jumping

The Booktopia Group Ltd (ASX: BKG) share price is jumping this morning after the e-commerce business announced a new partnership.

What’s the new partnership?

Booktopia revealed that it has entered a new partnership with global online education technology company Zookal to be the exclusive supplier and fulfillment partner.

Under the agreement, Booktopia will source, supply and distribute all of Zookal’s physical book orders from a range of approximately 185,000 titles. With the current academic book sales season coming to a close, Zookal is forecasting annual book sales revenue of approximately $22 million in this financial year.

When does the new agreement start?

It starts on 1 May 2021, with a full year of earnings to be felt in FY22.

Booktopia said that this agreement will provide greater relationships with suppliers as well as improved asset utilisation and economies of scale at the company’s new distribution centre at Lidcombe in Sydney. Zookal’s Alexandria distribution centre will be decommissioned.

Any other announcements?

Booktopia also reported a new record for academic sales as universities and schools return to the classroom following the disruption to the 2020 year.

For the current financial year to date, the company has achieved total academic and corporate book sales of approximately $53 million, up more than 30% year on year.

Booktopia said it’s on track to achieve its upgraded full year revenue forecast of $217.6 million for the 12 months to 30 June 2021.

Management comments

The Booktopia CEO Tony Nash said the Zookal partnership would extend the company’s exposure to the lucrative and growing educational book market:

Education remains one of our fastest growing segments and our partnership with Zookal will ensure we are continuing to grow our penetration into this sector.

Like Booktopia, Zookal has established a strong reputation for holding an extensive range of titles and delivering to customers in a timely fashion. As their exclusive supplier and fulfilment partner, we look forward to maintaining these high standards.”

Summary thoughts about the Booktopia share price

Booktopia believes there is a substantial growth opportunity for it to increase sales in the pre-school, primary, secondary and tertiary sectors and will continue to look for opportunities to grow in that sector.

I think that Booktopia could be one to watch if it can keep growing its market share of books in different categories. It’s hard to say how good the long term future is. Will people steadily move to e-reading? Or will there always be a market for the physical product?

It’s one of the ASX growth shares to keep an eye on, but selling books is not a revolutionary new market, so don’t expect too much long term strong growth.

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