15th August 2014
The story of Eastern Liberty Sdn Bhd, trading as Borneo Books & Borneo Books Online, from 1999 to end 2013.
Books as a retail business for Rosalind Tsang began in the 1970’s as part of a souvenir and gift business called Borneo Craft. As Sabah became popular with tourists, trade became very good, particularly for crafts, which had a higher mark-up than the books.
By 1999 craft retail had become more competitive (more outlets) and closer to the present day state of saturation (everybody in the world now has a rip-off version of a painted wooden Balinese cat!) but the book side was looking promising, with many new titles coming on the market.
So we set up a book shop called ‘Borneo Books’ on the ground floor of the Wisma Merdeka, separate from Borneo Craft. Once stock had been built up it did well enough as a small operation with 3 staff, specialising in all aspects of Borneo in-print literature, particularly history and natural history. The strategy was to concentrate on a limited range of subjects and to pursue these to much greater depths than a general book store could do. This was popular with our customers (“A breath of fresh air for book buyers in KK”) and we developed a loyal following.
The Build Up
Initially our business did well as there was a steady flow of new publications from local publishers (notably Natural History Publications – Datuk C L & Datin Connie Chan), and there was an increasing number of customers prepared to pay the high prices of specialist books. Moreover there was little competition. Once we were big enough to buy multiple copies direct from publishers rather than single copies from NHP acting as wholesalers, we did even better.
By 2003. there was enough turnover to import new, quality novels (no airport trash!) from the UK, and make substantial contracts with organisations like University Malaysia Sabah, The Sabah Forestry Department, Sabah Parks, WWF and the SE Asia Rainforest Research Programme (SEARRP) of the Royal Society for the supply of text books and journals. Since the year 2000 the money coming into Sabah from Europe for biodiversity and environment studies had been rising steadily, and we sold lots of books to research scientists, thanks largely to NHP’s investment in natural history books.
One thing that helped us very much right to the end, and meant that we could continue longer than would otherwise have been the case, was that about half our titles came from NHP, which has stock of each of their titles in the Wisma Merdeka. Because of our excellent working relationship with C L Chan and Connie, books were available to us at a few minutes notice. In contrast, for overseas suppliers like West Malaysia and Singapore, running out of stock with long delays re-stocking was a constant opportunity cost as we were not capitalised to carry large numbers of each title, and there was postage to pay too.
By 2005 we were were being squeezed on rental for the bookshop, but were still profitable, but then in 2006 the rental became too much and, in any case, with the sale of my house in Yorkshire we were looking for space for a 2nd hand shop to sell off the large library I had inherited from my parents, so when we were offered a very large space on the 2nd floor of the Wisma Medrdeka at a very low rental (down a cul-de-sac, it was difficult to rent out), we grabbed it. We split this into two and had a large area for new books and a smaller one, fitted out to resemble a wood panelled, creaky old shop in the Charing Cross Road in London (e.g. Foyles), for 2nd hand books. I did my best to impersonate the bad tempered owner of such places who, in his heart, does not want to sell any of his beloved books, soaked in sentimental value, except, of course, to a good home at a very high price.
The six figure ringgit cost of renovation we funded from our own capital.
As well as my dusty old books, we sold off old National Geographics, reproductions of old maps, paintings and photographs, which we displayed on our “Art Wall’. The UK has a surplus of books and maps from house clearances of the deceased, and we were able to buy paperbacks and good quality editions of the classics and ship them out, a ton at a time, by container at low cost.
We had one supplier from the UK who knew exactly the kind of books we wanted, for example, handsome gilded copies of Charles Dickens, practically worthless in the UK but looking good on the bookshelves of the burgeoning educated class in KK (the oft repeated remark that “Nobody buys books” is true of the majority, but there is a minority of passionate buyers and readers, and others who simply want to expose their children to good books).
In the in-print bookshop we had a seating area and a pantry. The deal was customers drinks were free of charge provided they made their own. The bookshelves around the seating area were stocked with not-for-sale items like historic copies of the Sarawak Museum Journal, trying to make Borneo information more accessible to the public.
In 2007, when my hip wore out and I could no longer reach the shop from my office, Rosalind built me an office in one corner of the big shop. The coffee area had become quite a social centre and we had a lot of lively discussions there. It didn’t, though, necessarily lead to more book buying, more like more free coffee drinking. But the vibes were good.
Away from the shops we would attend the yearly International Bird Festival in Sandakan and provide a stall at conferences concerned with forestry or conservation. Most of these made a satisfactory profit but were logistically very challenging, and tiring. We were getting old. The load on Rosalind was extremely heavy and tensions rose.
Now, with four shops, we had to employ ten staff, who seemed all to be prone to serial emotional drama. In a gesture towards modern times, we had installed broadband in the big upstairs shop, so that customers could go online and use our online book catalogue. This clever wheeze saved the cost of printing a catalogue but had the bizarre unintended consequence that the staff became addicted to Facebook, and spent hours online chatting to ‘friends’ when Rosalind and I were busy elsewhere.
Sometimes we had spikes of sales when a much anticipated book was launched or the tourist season was busy. We found, however, that the average 30% profit on a book sale was not much when set against wages and overheads, and left little to live on or to pay back to our savings the money we had borrowed from ourselves for fitting out the four stores that we had at our peak.
However we were profitable at times until 2009 when a whole series of factors went against us.
- The collapse of Lehman Brothers in 2008 happened while we were in Singapore sourcing a quality print company for reproducing our old maps, which were selling well. We knew at once that we would be badly affected and so it proved, but not at first. Surprisingly, visitor numbers held up or a year, but then the drop was large. Moreover the people who still came were far more careful with their money, and our books were beyond their budget.
- Meanwhile the rise and rise of Air Asia did us no favours, because (with Malaysia Airlines hard on their heels) they were able to open up new links from Kuala Lumpur to Sandakan and Tawau, draining away our natural history and research scientist customers because they no longer needed to come through KK.
- An influx of general bookstores to KK meant a major increase in competition. Times Bookshops opened up a large store only 300m from us in the new mall Suria Sabah. At the same time Amazon, which had been around since 1996, really got its act together and it became cheaper for people to buy popular books that way than for us to import and sell them.
- Our contracts for selling imported textbooks from overseas had to cease as I found it too time consuming and costly. I was spending as much as a month each year in the UK buying and arranging delivery.
- All along we had problems due to our inability to recruit sufficiently well qualified staff at the low wages we could afford. Also once we were up to 10 staff we found ourselves often in crisis because of the high rate of staff turnover.
- There did seem to be some impact of the switch of the under 50’s from book buying to reading online. We never managed to quantify this, but one became aware of the sentiment “Why should I buy this book at such a high price when I can read it online so much more cheaply or for free”. Books have ceased to be trendy for many former buyers. Fortunately NHP’s more specialist books are not available online free or otherwise. Amazon found difficulty sourcing them and occasionally would announce that one was ‘Out of Print’, when in fact it was in print but they couldn’t get a copy at a good price.
- The rise of fixed costs such as wages, rent and electricity eroded our profit margin as we could not raise prices due to increasing competition from large businesses which could buy in bulk at a lower wholesale price.
- A coup de grace seemed to be the loss of the leases on our two 2nd floor shops in 2011. Looking back this was probably a blessing in disguise as other factors had just about made the business profitless, but the loss of revenue meant that we had no further hope of fully paying ourselves back for the large sum we spent to renovate the 2nd floor shops.
What we were left with was the old Borneo Craft shop on the ground floor of the Wisma Merdeka. We spent a further largish sum on renovating that to make a very tasteful shop selling two thirds books by space and one third souvenirs and, for a couple of years, that did well, supported by an increasing range of good books published by NHP and John Beaufoy.
However the impact of the recession and the local factors above continued and demand for books kept falling. We were by now short of capital and stock and unwilling to chance further money, so we ceased doing things which might have helped, like promotion by leafletting and advertising. We were losing the battle to survive.
This led to exhaustion, worry, loss of enthusiasm and interest and in the end, after 38 years in the retail trade, Rosalind decided to retire as the future looked ever more difficult. The impact of terrorist raids from the Philippines in mid-2013 cut tourist arrivals further and we closed down our last shop, Borneo Craft, on the 31st December 2013.
True, as predicted, there was some switch from the East Coast tourist sites to the KK and the West Coast, but this didn’t work for our book buying public, mostly from the West and Australia, for whom travel advisories are taken to mean that nowhere in Sabah is very safe.
Starting in 2013 there was a massive increase of mainland Chinese tourists on the West Coast, but few spoke English and even fewer bought books. This trade has now been drastically cut back by the disappearance of MH370, the mishandling of which in PR terms by the Malaysian government so angered the Chinese Republic Government that there are currently no travel agents in China offering trips to Malaysia.
Meanwhile the downing of MH17 over the Ukraine has done nothing to encourage Western tourists that it is safe to travel to SE Asia!
We therefore feel that it was good that we got out when we did.
We still have BorneoBooks online, but that has been hit by Amazon, and also we have had problems with a web designer whose nerves failed him while doing a re-vamp and, above all, with Pos Malaysia. They have raised their parcel charges by very large amounts and created a database for calculating overseas postage rates which is so complex that we have not yet found a web code writer who is able to provide us with a database. We have therefore abandoned direct payment and in future will only trade by providing quotes. This will produce little more than pocket money, given that books are now extremely expensive to send to our clients overseas.
Although we are digitally literate enough to be able to run a website, we were slow to latch on to the new technologies and adopt the right language for promoting book sales offered by Facebook Pages, blogs, Twitter and so forth. Such things (sigh) are for younger folk.
We often said to each other “If we were 30 years younger, we could hack this” and maybe age was our core problem. Failure to adopt modern sales practices didn’t help. Our management approach owed more to traditional small Chinese retailing than it might have done. But the big problem was that the mark up for retailers in the book trade is very low. We looked in envy at other retailers with higher margins and our motivation decreased further. We thought “It would be good to be re-incarnated as a trendy boutique owner!”
As a postscript it is interesting to look at our little local failure in the light of the philosophy of Alan Greenspan and other exponents of ‘modern industrial capitalism’. He writes*‘At its core is creative destruction, a system of winners and losers. If we wish to achieve ever higher levels of productivity and standards of living, there is no alternative but to displace obsolescent low-productivity facilities with others embodying those technologies at the cutting edge. As beneficiaries of this process, we have to accept the inevitable hardship imposed on significant sectors of our workforce.’ He is talking about factories closing down, but it seems to me to apply equally to retailing. If Greenspan is the guru of this philosophy then Jeff Bezos of Amazon is very much The Enforcer. Sweeping changes to the way we buy things isn’t new (think of supermarkets) but the scale of Bezos’ ambition in retail is enormous. Take the book business as an example. He has (almost) gone on record as saying that small independent bookshops are doomed and his demeanor suggests he’ll do his best to make it happen, because he sincerely believes that overall the world public will benefit from lower prices and greater choice and anyone who can’t see that is just plain tedious. From the Borneo Books perspective this seems just like the elephant stamping on the little fellow, who really isn’t in the way at all. We were told often enough in the shops that we enriched the local intellectual scene, partly because of our social dimension and our knowledge of books and where to get them. Amazon has only the limited substitute of online volunteer book reviewing and chat forums.
At what point does society need to step in and decide whether modern capitalism, if not curbed somewhat, will lead to poverty of ideas and intellectual development? What is happening is breathtaking in its scale. Amazon was only partly responsible for our demise, but I do see us as a discard of the application of modern capitalism, the impact of which I should like to see softened.
On a happier note, at the other end of the global scale of things, I would like to inform you, kind reader, that a new shop selling books has emerged from the ashes of BBooks, on the same site. Owned and managed by C L Chan and his wife Connie, it sells 50:50 handicrafts and books, as an outlet for NHP publications. It has a fine display and is very well stocked, except that the range of books is more limited (bringing in the books of other publishers to Sabah, with the recent hike in postage, is now not profitable). Now much better capitalised and with better profit margins, it has a very good chance of success, and I hope, when and if you are in range, you will support it. Do your bit to soften the impact of modern capitalism and enjoy the warm glow!!
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9 August 2014
Minor corrections of grammar 23Feb2016
*Quoted in an excellent review in the London Review of Books by Stephen Holmes of Greenspan’s book ‘The Map & the Territory: Risk, Human Nature and the Future of Forecasting’ 2013 [basically a justification of his philosophy as quoted above. The greatest recession since the 1930’s Depression hasn’t dimmed his enthusiasm for unfettered capitalism. He is unrepentant – and so are many others who benefit from it. Those who suffer need a voice.]