Industry Committee on May 7th, 2013

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

So there was a major digital leap then. Can you equate the savings from doing so with keeping more people employed at your service?

[Jason Hamilton]

That's a difficult number for me to estimate, because that leap happened right around the same time I joined the company. So it's tough for me to say. But there were certainly savings that came as a result of that, because we went from having to phone and e-mail every single person every single time. We actually had to deliver to our students across the country, so we had shipping costs that were way higher. All of that changed once we pushed online but, unfortunately, I can't give you a hard number on that.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Did you have a wider market once you went online, or were you simply reaching the same high schools?

[Jason Hamilton]

Certainly, our market expanded, but because we have sales reps across the country it didn't impact us in same way that it would have done for a bricks-and-mortar facility. We already had that reach in a lot of ways, so it didn't massively change our market.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

How do you service high school students who don't have access to the Internet at home? You don't have to go very far outside of the boundaries of Ottawa to see that.

[Jason Hamilton]

We service them either through the access they can find through their school, or we will have our sales reps or trip counsellors go to them and provide them with the resources at meetings with them in their schools.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you.

What exactly does Shopify do for clients for $29.95 a month?

[Harley Finkelstein]

Shopify provides all the technology they would need to run an online store. That means two things. It means the front end of the store, so the storefront that you would go and visit—if you go to LaBottega.ca, the thing that you see—but also the back end where they do their inventory management, fulfill orders, and have the ability to accept payments. It's effectively a business in a box.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Are you doing the website building and putting together the payment system, transfers to the banks, and managing their inventory for them?

[Harley Finkelstein]

Correct. We're not an agency so we won't design the site or the store for them. Having 55,000 stores, it would be tough to design all those stores. But Shopify is a do-it-yourself service. We have template designs, and anyone who knows a little bit about graphic design can customize their site to anything they like. While most of our stores are small businesses. Google, GE, Wikipedia, Gatorade and Budweiser also use Shopify. So even the larger, hegemonic corporations are using Shopify to sell products online.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

How do people find out about your company?

[Harley Finkelstein]

We're signing up 3,000 new stores every single month currently. Most of that growth is coming from online advertising, so Google AdWords, in particular, is very strong for us. But because we are also trying to be evangelists to small businesses, we run a lot of competitions all over the world—build-a-business competitions. That brings us quite a bit of business.

Finally, I would say that word-of-mouth is probably the third strongest way that we acquire new customers.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

How do you see yourself in terms of being an innovator and innovating the ways that companies do business?

[Harley Finkelstein]

Good question.

The reason we started the business was not that we wanted to be a software company, but that we were frustrated by the software on the market. In 2005 there were two ways to build an online store. Up here you would go to a big company like GSI Commerce or Cactus Commerce in Gatineau, and for $100,000 to $1 million they would build you a custom online store. Everyone from Canadian Tire to Loblaws went that route. But we didn't have $100,000 or $1 million. At the bottom end of the spectrum you had companies like eBay and Etsy and these platforms that would allow you to place an item for sale on their marketplace. The problem was that your business at that point was always owned by eBay effectively; it was never a stand-alone business. So scalability wasn't there and you would eventually graduate off eBay's platform. We wanted the functionality that the enterprise guys were providing at the price points that eBay was providing. So in that case I think we democratized retail to the extent that anyone can compete with Walmart now and sell T-shirts online, and in some cases can win if they're savvy with marketing.

[The Chair, Conservative, David Sweet]

Thank you very much, Mr. Finkelstein, and thank you, Madam Gallant.

Now we go on to Monsieur Lapointe.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I have a point of privilege first. Can we take a minute so that people can put on their translation device and see that it works, so that it won't be taken from my time.

[The Chair, Conservative, David Sweet]

It's certainly working in my ear, Monsieur Lapointe.

[The Chair, Conservative, David Sweet]

Can you put your earpieces on for translation, unless you....

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Thank you for being here, gentlemen. All four of you made extremely relevant presentations.

[Geoff Regan, Liberal, Halifax West, NS]

On a point of order, sorry, but they're still working with their earpieces.

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I think everything is working now.

I will share with you two concerns I have regarding a very important aspect of some recent decisions. You will all be able to comment afterwards.

Mr. Hersche, you spoke about the upcoming auction of the 700 MHz spectrum. You fear that it will not be a real benefit for a number of rural areas. I would like to tell you that, in southeastern Quebec, in the mountainous areas, we share your concerns.

Could you perhaps tell us a little more about possible solutions? You started to speak about it. You had some very interesting ideas.

Another component that I found fascinating in your presentation was the concept of…

bricks and clicks.

Based on that approach, if retailers don't ride the wave—in other words, they do not adopt online sales—they will simply be victims of it.

I do not agree with the 700 MHz spectrum. I think it should be rented, not sold, but it is being sold. It is expected that the proceeds of the 700 MHz sale will go into the consolidated revenue fund. However, no specific program is dealing with serious problems like that.

Since we are talking here about a sale that will generate hundreds of millions of dollars, Mr. Finkelstein, do you think it would be relevant to use the funds for initiatives like the Irish one you mentioned?

The idea is to avoid having our main street merchants be completely overtaken by the new technology. We need to help them address these major challenges. I think that is the idea here.

bricks and clicks.

I would like to hear your comments on these two major concerns.

[Harley Finkelstein]

Is it all right if I speak English?

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

I do understand English, but I want to do it in French.

[Harley Finkelstein]

But it's okay if I respond in English?

[François Lapointe, NDP, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

No problem.