Government Operations Committee on Oct. 31st, 2016

[Andrea Stairs]

We have access to them, so we have fairly ongoing...and I'm not part of this. It's someone on my team who is engaged with Canada Post. We're working on our label printing and bringing different rates to our members. They will consult us on new programs that they're developing and get our input. I would say there's a fairly continuous back and forth with them in terms of, not just us asking for things, but being more of a consultant in terms of what our sellers are looking for, pain points, that kind of thing.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Which of your recommendations did Canada Post accept?

[Andrea Stairs]

In the past, we've worked on a flat-rate box, which was a pilot we ran that was exclusive to eBay. We've gone as far as that in terms of the creation of a new service. Then we were engaged fairly early on with the whole concept of flex delivery, allowing Canadian consumers to reroute packages to a postal outlet that was more favourable to them. I'm sure you guys are aware of the flex delivery program, but we were involved in discussions such as “Would that be a service that your customers would like?”, those kinds of conversations.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

I am sensing, not so much a confrontation, but a degree of interaction between the commercial side and the residential side, between the access to a residential market, a small one, and access to a clientele.

Are you suggesting that Canada Post should, through its rates and its flexibility, subsidize in some way the small and medium-sized businesses working in e-commerce? It would allow them to offer better rates. You mentioned free delivery. Is that possible in today's world?

[Andrea Stairs]

Regarding the internal workings of Canada Post, how the different lines of business fund or don't fund each other, and how they use the same infrastructure, again, I'm not an expert on that. I'm here representing the end-users, the customers, both on the business side and the consumer side. How we get there, how we make the sausage, I'm not sure. This is what the committee is tasked with.

However, I think the outcome is that we need to have a broader range of services so that businesses can pick the ones that make the most sense and deliver value to the customers in a way that makes sense for those customers. Again, the utilization of infrastructure and whether there are subsidies, I think is something that is beyond my expertise certainly.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

Okay.

Along the same lines, when we went across the country, chamber of commerce officials told us that they actually were ready to pay more if delivery was quicker and the service was of a higher quality.

Is that something you are suggesting? Would that work for your area?

[Andrea Stairs]

Rather than all the services being priced relatively the same, rate-tiering should be offered so that very expensive services, like same-day delivery or one-day delivery, would have a premium. However, you need to have the flip side, where slower services are your economy service. The challenge there is to also have tracking, but I think that creating those tiers and pricing things in that way makes sense.

[Ramez Ayoub, Liberal, Thérèse-De Blainville, QC]

There is talk about the potential for strikes and bargaining.

What impact does that have on you? Have you been able to quantify the highs and the lows created by the uncertainties of bargaining?

[Andrea Stairs]

We saw a huge impact four years ago in the business. I think the impact, particularly on the buyer side this year, was more muted. Canadian buyers just seemed to carry on buying. What we did see, though, was that our sellers had to scramble, particularly the small sellers. Their cost of doing business really increased significantly over the summer.

It wasn't that they had to have these alternative solutions in their back pockets; they actually had to be using them because—and there were a couple of points there—at any moment there could have been a strike or a lockout. They would have had to have already shifted their business to these alternatives, which were very expensive and costly to manage. That's what we saw and heard from our sellers, particularly over the duration of the entire summer, that managing these alternatives was very expensive.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

We'll go to our final two interventions.

They will be five minutes each.

Mr. Clarke, the floor is yours for five minutes.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

Good morning, Ms. Stairs. I am pleased to see you here this morning.

You deal with Canada Post directly, in a business sense, of course. When Canadians order things on eBay and their parcels arrive late, to whom do they complain? Do they complain to eBay or to Canada Post?

[Andrea Stairs]

eBay has a money-back guarantee, so if your item doesn't show up, then you come to eBay and we will make you whole. Then we will go and sort it out with the seller. This is why tracking is so important, so the seller is able to justify that they inducted their package, that it went through, and that it was or wasn't delivered. If there's an actual issue with something being lost in the mail, and you can prove that with tracking, then we would go to Canada Post. It rarely happens that things actually get lost. Usually you have a bad actor, so tracking allows you to sort that out very quickly. That's what usually ends up happening. The first line of interaction is the buyer and seller, and then eBay steps in the middle and will use the tracking data to sort things out.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

Okay.

I imagine that it happens very rarely, as you said. However, after the tracking process, when people find out that the delay is due to an error on Canada Post's part, what happens? Are databases turned over to Canada Post? Have you set up a relationship with Canada Post to deal with that?

[Andrea Stairs]

We have delivery estimates on the website. As a buyer, when you're buying something you can see the window in which the parcel is supposed to be delivered. As long as there's tracking on that parcel, if the parcel is delivered outside of that, then the seller is not in any way affected. On a platform like eBay, feedback is obviously incredibly important, and the ratings that sellers receive from their buyers is very important. We will protect sellers from bad ratings in the case that the parcel took longer through no fault of the sellers. That's why tracking becomes very important, because if the sellers put something into the mail and they don't have tracking, there's no way to prove that it wasn't their fault and that they didn't just take a really long time getting it to the post office.

In this setting, particularly a marketplace setting, where you have feedback, and seller ratings are driving economic value because they impact where you rank on search results and they impact the fees that you pay, affordable tracking becomes critical to being able to conduct your business well.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

Has Canada Post ever had to reimburse either you, or the companies that go to your website, because of any delays?

[Andrea Stairs]

I don't think that happens.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

Ms. Stairs, I am sure you are aware of the five-point action plan.

[Andrea Stairs]

I know it more or less, yes.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

Could you tell me what you think about the plan, especially in terms of the way it has been implemented, that is, between 2013 and the moratorium that has been in effect for a year?

After the five-point plan was implemented, what consequences, if any, have there been for your business?

[Andrea Stairs]

There weren't that many.

I think the major component of that plan was the move to community mailboxes. I don't think that has had a significant impact on our buyers, outside of their reactions in general. I don't think the reaction on eBay was any kind of differential.

[Alupa Clarke, Conservative, Beauport—Limoilou, QC]

Okay.

In recent weeks, our committee has heard a lot of proposals to add services to Canada Post, especially government services. They affect the employees and the offices alike.

What is eBay's opinion about those additional services? Do you believe that Canada Post will be able to meet your needs as effectively, as quickly and as efficiently if all kinds of services are added? How do you see that?

[Andrea Stairs]

Again I come back to the distraction of the entire corporation with additional unrelated services. I think if there's a positive revenue stream to them, then it might be something worth looking at, but I really am concerned about pulling resources away from the core business.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

For our final intervention, we have Mr. Grewal, for five minutes please.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you very much, Mr. Chair. I will be splitting my time with the parliamentary secretary.

Thank you, Andrea. It's good to see you again. We saw each other just last week at the pre-budget consultation in the finance committee, and you were advocating for an increase to the de minimis there. I like to see your consistency, that you're advocating for an increase of the de minimis here.

It's encouraging to know that Canada Post offers such great service in the parcel business and that 90% of your parcel business is with Canada Post, which is promising. Having said that, it doesn't tell the whole story, because you're just one customer from the Canada Post perspective. I am interested to know how much impact there is on your margins when there is a disruption like the one that was about to occur this previous summer and your guys go to private companies.

[Andrea Stairs]

The main impact is on whether our sellers can convert. It's whether the listings on eBay have become more expensive and therefore, they're unable to convert. Basically our incentive is aligned with our sellers. We charge fees on successful listings. If the shipping is too expensive, listings won't be successful. It doesn't really impact our margins. It really impacts the top line, whether our sellers are actually creating sales, which we record as gross merchandise volume, which is a key metric in our business.