When Sven Huber left his job at the German book publisher Bertelsmann in 2011, he wanted to build a business that could both make money and have a positive impact on society.
He teamed up with a former Bertelsmann colleague, Toni Montserrat, to launch a start-up in Spain, where he has lived since 1999, that would get children excited about reading. The result is Boolino, a website that acts as an online marketplace for children’s book and an educational resource for parents who want to inspire a lifelong love of literature in their children.
Noble intentions aside, the market for children’s books in the U.S. was worth close to $3 billion in 2013, according to the Association of American Publishers. Digital distribution in the publishing industry, in the form of easily downloaded e-books, has lowered fixed costs for new firms. As e-book sales increase, publishers can scale back investment on expensive real estate for retail stores or large distribution networks
When U.S. e-book sales of the hit Hunger Games series of novels surged in 2012, the percentage of books bought from online retailers and through apps rose to 28% in the first nine months of 2012 compared to 23% in the same period in 2011. At the same time, sales through physical retailers fell from 68% to 63%.
“The main challenge is not fierce competition, but like in all media markets today, it is related to a fundamental industry restructuring. This requires the development of new business models, a challenge with which normally new entrants have less trouble than the traditional players,” says Huber.
Similar to Amazon, Boolino has a recommendation engine to help users discover suitable children’s books. But, the firm tries to differentiate itself from the online retail giant by providing a more personalized service to customers. Parents can buy a ‘my little book box’ containing books for children aged up to eight years, as well as crafting activities to get families reading together.
The company is largely self-financed by the two founders, though it received early investment from Wayra, a startup accelerator of the Spanish telecommunication incumbent Telefónica. Huber plans to raise up to €1 million ($1.3 million) in a round of series A funding. Current revenues are on course to reach €250,000 ($340,000) in 2014, according to Huber.
Over the next 18 months, Huber plans to expand the company into new countries, launching English and German language versions of its website. The firm then plans to monetize its services in the U.K., U.S., and Germany, projecting €1.5 million ($2 million) in turnover by 2015.
Competing against both Amazon and local bookstores has its challenges. In the U.S. at least, data from the market research firm, Nielsen, shows that the majority of children’s books bought are still print books and are still acquired through physical stores. Being an online only start-up, Boolino must also pay Amazon to use its vast distribution network for its own logistics.
If the company can remain agile enough to adapt to the new online publishing landscape, through the use of strategic partners and shrewd marketing, and successfully attract new users, then it may be on course to take serious market share from the incumbents.